On the occasion of the visit Jean-Marc Ayrault, French Minister for Foreign Affairs and former Prime Minister, the AFD strengthens its support to the development of the Kenyan electricity sector by the signing of a new 33 million Euro financing (about 3.7 billions Kenyan shillings).
This financing agreement was signed in Nairobi on August 1st, at State House, by the Cabinet Secretary Henry Rotich with Bruno Deprince, Regional Director for East Africa of AFD, in presence of President Uhuru Kenyatta and Jean-Marc Ayrault, French Minister for Foreign Affairs and former Prime Minister.
This 33 million Euro financing will support the installation of renewable energy generation units (primarily solar photovoltaic, but also in some cases wind turbines) in 23 mini-grids currently powered by diesel generators. This operation will be implemented by Kenya Power; a company owned 50,1% by the Government of Kenya in charge of electricity distribution in the country.
It is expected that around 9.6 MW of solar photovoltaic and 0.6 MW wind capacities will be installed. The project is in particular expected to:
- reduce the average cost of electricity production of mini-grids by an average of 20%;
- contribute to the improvement of energy security of supply of Kenya;
- support economic development by promoting more reliable electricity service;
- reduce greenhouse gas emissions associated with the combustion of diesel.
This new project contributes to the long-term partnership developed between the Kenyan authorities and AFD in the energy sector. Since the beginning of its activity in Kenya in early 2000, AFD committed over 800 million € of loans to the Kenyan power sector, spread across the entire industry value chain: drilling for the development of geothermal energy, renewable energy plants, national grid and interconnection with Ethiopia, electrification in rural areas and in urban areas, and even support for investment in the sector by SMEs. AFD Group is among the biggest financiers of the sector.
In particular, this new project is part of a long term partnership between Kenya Power and AFD. Indeed, AFD has already made funds available to Kenya Power to set up the Stima Loan (microfinance facility of Kenya Power to cover customer contribution for connection to the electricity network), to implement past rural and urban electrification projects and to support the implementation of Kenya Power Distribution Masterplan. The two institutions are also about to partner for a 120 million Euro -corresponding to about 13.5 billion Kenyan Shillings- contribution (including a 30 million Euro grant from the European Union channelled through AFD) to the Last Mile Connectivity programs which aims at fast-tracking electrification at national scale.
Like all the projects supported by AFD in Kenya in this field, this new financing is aligned with the key pillars of France's cooperation policy in the energy sector, i / promoting access to electricity for all, ii / supporting sustainable economic development, and in particular iii / supporting the development of renewable energy to contribute to the fight against climate change, following the CoP21 that was hosted in Paris.
Referring to the climate negotiations hosted in Paris (Cop21), the French Minister for Foreign Affairs highlighted that “one of the critical topics of those international discussions is the financing of the fight against climate change. The signing of this financing agreement shows that significant resources are indeed made available to the States, parastatals and the private sector to support climate friendly projects. France is committed to provide such financial resources and has announced recently that it will increase by 2 billion euros [more than 220 billion Kenyan Shillings] a year its commitment to the fight against climate change in developing countries.
The French Minister for Foreign Affairs also highlighted that this financing was aligned with the “Joint Declaration on Sustainable Energy signed by Kenya at the Cop21 in Paris, to which France, EU, Italy, the Netherlands and the US are parties”.
Kenya Power is the biggest company in the electricity sector in Kenya. It is in charge of electricity distribution and of the management, maintenance and strengthening of transmission lines built before the creation of Ketraco (in charge of new electricity transmission lines). Kenya Power is today the single buyer of electricity generated or imported into Kenya. Kenya Power is a public company 50.1% owned by the Kenyan government. The company is listed on the Nairobi Securities Exchange.