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
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.
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.