November 8, 2012 - IFC, a member of the World Bank Group, is investing €20.7 million and is arranging €20.7 million loan from Standard Bank to finance the development of a power plant to meet the energy needs of Kenya to fuel its economy and create jobs and boost growth.
Independent Power Project (IPP) by Gulf Power Ltd. near Nairobi, Kenya
,
will use the loan to create and
sell all output to the national distributor, Kenya Power and Lighting Company, increasing the supply of electricity in the country.
The World Bank estimates that power shortages currently cost the Kenyan economy two percent of GDP growth.
The 80 megawatt Gulf Power plant will use heavy fuel oil (HFO), to help diversify Kenya’s electricity away from hydropower. During times of drought, when hydropower drops in supply, Kenya has had to turn to costly emergency power. HFO power plants are a quick and viable option to address the energy deficit in Kenya, given the relatively long development period of other sources like geothermal energy and coal.
The project is a result of the Kenyan government’s tender of three power plants in 2009, to encourage private sector participation in the electricity generation. Gulf Power is owned by Gulf Energy Limited, an oil and gas trading company, and by Noora Power Limited; both companies incorporated in Kenya. Earlier this year, IFC also invested in another winning bidder for the IPPs – Thika Power Ltd.
“Independent Power Plants can assist governments in improving supply and quality of power in a country”, said Francis Njogu, CEO of Gulf Energy Ltd. “By loaning €41.4 million to this project, IFC and its partner institutions are filling a financing gap as Kenya seeks to transform its power generation and distribution network.”
Oumar Seydi, IFC Director for East and Southern Africa said, “As demand for energy increases in Kenya; independent power projects can help the government boost electricity supply and fuel the nation’s economy. Gulf Power’s choice of heavy fuel oils will diversify Kenya’s energy sources, making power generation more stable.”
IFC will work closely with Gulf Power to establish adequate environmental and social policies and performance standards for the upcoming plant. Total cost for the Gulf power plant is estimated at €83 million. Alongside IFC and Standard Bank, OPEC Fund for International Development will be investing €20.7 million to finance the project.
Increasing power generation is at the heart of both the Kenyan Government and IFC’s strategy for infrastructure development. IFC invested over $1 billion in infrastructure and natural resources projects in Africa in fiscal year 2012.
About IFC
IFC, a member of the World Bank Group, is the largest global development institution focused exclusively on the private sector. We help developing countries achieve sustainable growth by financing investment, mobilizing capital in international financial markets, and providing advisory services to businesses and governments. In FY12, our investments reached an all-time high of more than $20 billion, leveraging the power of the private sector to create jobs, spark innovation, and tackle the world’s most pressing development challenges. For more information, visit
www.ifc.org
.
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