Kenya signs Sh9.8b loan to build power line from Ethiopia
A cheaper power option from Ethiopia got closer earlier Thursday after the Treasury signed a Sh9.8 billion financing for the construction of a high voltage transmission line stretching 1045 kilometres.
Finance minister Njeru Githae and the African Development Bank (AfDB) signed the 50-year loan that will enable Kenya to import hydroelectric power at a cost of seven US cents (or Sh6) per kilowatt hour. In Kenya, energy charges for domestic consumers are Sh8.10 per kilowatt hour up to 1500 units and Sh18.57 per unit for units above 1500 kilowatt hours.
Small commercial customer consuming no more than 1500 units pay Sh8.96 per unit. The AfDB loan will be at an interest rate of one per cent per year after a 10-year grace period, with a one-off commitment fee of 0.5 per cent of the value of the loan and 0.7 per cent service or arrangement charge.
Mr Githae said the terms are close to those of a similar loan of Sh37.5 billion from the World Bank intended for the interconnection of the power line to the regional power pool. The regional Eastern Electricity Highway Project is being sponsored by the World Bank at a cost of Sh110 billion ($1.3 billion) with the aim of integrating power transmission networks in the five East African countries as well as the Democratic Republic of Congo.
“This project will facilitate export of surplus power from Ethiopia to Kenya and therefore increase power supply in the country,” said Mr Githae during the signing ceremony.
The minister also signed another Sh3.7 billion loan with ADB to fund training in engineering and applied sciences by equipping workshops with modern equipment. It will also finance capacity building in universities through offering lecturers scholarships for master’s and doctorate degrees. Minster for Higher Education Margaret Kamar said during the meeting that there was a shortage of 30,000 engineers and 90,000 electrical technicians.