The World Bank approved a $180-million loan guarantee on Monday for Kenya Electricity Generation Company to help strengthen the financial position of the state-run company, which produces more than 70% of the country's electricity.
The guarantee will help in long-term commercial financing of up to $300-million to refinance part of KenGen’s existing commercial loans, enhance its credit quality and promote further development of renewable energy in Kenya, the World Bank said.
Kenya has an installed generating capacity of 2 370 MW and peak demand of about 1 770 MW. KenGen, which is 70% owned by the government, has an installed capacity of 1 631 MW.
Demand for electricity is growing at about 8% a year according to the government’s transmission and generation plan.
East Africa's richest economy is ramping up electricity production and investing in its grid to keep up with the growing demand for power and to reduce frequent blackouts.
It relies heavily on renewables such as geothermal and hydropower.
The World Bank said in its statement that the project would help build on those gains and "ultimately ... lower the cost of electricity".
Kenya's energy minister ordered the sector regulator on Friday to review electricity tariffs after persistent complaints by consumers that electricity distributor Kenya Power was overcharging them.