XINHUA NEWS SERVICE
REPORTS FROM THE AFRICAN
of Nairobi 83 MW fuel plant
heavy fuel plant is part of Kenya’s
Least Cost Power Development Plan
NAIROBI (Xinhua) --
The World Bank’s political risk insurance arm, the
Multilateral Investment Guarantee Agency (MIGA),
said Wednesday it supports the construction of
Kenya’s heavy fuel plant to help address frequent
power outages in the East African nation.
MIGA Chief Operating Officer Michel Wormser said it
will provide investment guarantees for the
construction of a 83- megawatt heavy fuel oil plant,
operated by Triumph Power Generating Company
“We are pleased to support this investment that
will help Kenya address the severe power shortages
it has been facing. Additional generation provided
by the project will contribute to economic growth in
the country,” Wormser said in a statement issued
Wormser said the heavy fuel plant is part of
Kenya’s Least Cost Power Development Plan, which
calls for an increase in the number of independent
power producers (IPPs) and a more diversified energy
The World Bank arm will be providing 102.5 million
U.S. dollars in breach of contract cover to
Industrial and Commercial Bank of China and Standard
Bank of South Africa for their long-term commercial
financing to Triumph.
“The heavy fuel oil plant is being developed on a
build, own, and operate basis approximately 25 km
from Nairobi. Triumph will enter into a 20-year
power purchase agreement with Kenya Power and
Lighting Company,” the World Bank said.
This represents the first time MIGA has issued a
contract of guarantee to a Chinese investor or
The East African nation is facing twin pressure of
electricity connection and generation. The
interconnected installed capacity currently stands
at 1,672 MW, including the 120 MW of the emergency
capacity, according to Kenya Power.
The current national interconnected system peak
demand is 1,330 MW. But the country is banking on
several power generation projects are currently
The company said the industry regulator, Electricity
Regulatory Commission (ERC)
has commissioned a study to inform the sub-
sector on new connection costs, and the findings
will be ready in two to three months’ time.
Kenya Power said the new connection costs are
independent of electricity use tariffs and are based
on the actual financial cost of connecting a
World Bank Group Through its lending and guarantee
instruments, is helping to mobilize the nearly 1
billion dollars in financing required to add 600
megawatts to the grid through IPPs.
MIGA is also providing coverage for Thika Power
Limited and Olkaria III, Kenya’s first geothermal
“In addition, MIGA is providing 11.1 million
dollars in coverage to CfC Stanbic Bank Limited
covering its swap arrangement with Triumph to hedge
against long-term interest rate risk,” the
The project is further supported by a partial risk
guarantee from the World Bank’s International
Development Association that backstops a letter of
credit from JP Morgan Bank of London.
The East African nation has historically relied on
hydropower for the bulk of its power generation.
During times of drought, when hydropower drops in
supply, Kenya has had to turn to costly emergency
Heavy fuel oil plants offer a viable and lower cost
alternative than diesel-fired plants to address the
short-term energy deficit in Kenya.
Over time, as more renewable energy plants come on
line, the heavy fuel plants are expected to
transition from base to peak- load operation.
Electricity utility, Kenya Power estimates that in
2012/13 electricity demand growth rate will be 4
percent based on trends recorded up to December 2012
and the economic growth forecast for the current
financial year riding on on-going economic recovery.
The company projects that in the years 2013/14,
2014/15 and 2015/16, the demand growth rate will be
6 percent per year.
Of this capacity, Independent Power Producers (IPPs)
will generate 851 MW while KenGen, the
quasi-government listed power generator will add 397
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