http://www.constructionkenya.com/wp-content/uploads/2009/04/kengen-300x199.jpg (http://www.constructionkenya.com/wp-content/uploads/2009/04/kengen.jpg)A view of Olkaria KenGen geothermal energy power station, Naivasha

KenGen has signed a Sh2.1 billion deal with French Development Agency (AFD) finance the extension of a third unit at the Olkaria 2 geothermal power station.
The loan, being extended to KenGen without the guarantee of the government,comes at a time when the company is working on increasing the generation of power in the country by 500 megawatts in the next five years.
Speaking in a news conference on Thursday, KenGen managing director Eddy Njoroge said the funds will be used in the engineering, manufacturing, supply implementation and commissioning of the extension of the project whose power supply is expected to be added to the national grid by May next year.
“The attractiveness of this source is in the high potential and the low operating and maintenance costs coupled with the fact that it is a clean energy source which attracts carbon credits,” Mr Njoroge said.
The attractiveness of this source, said Mr Njoroge, is in the high potential and the lower operating and maintenance costs coupled with the fact that it is a clean energy source which attracts carbon credits.
The project is expected to help greatly in harnessing the geothermal resources for power generation. Njoroge called for more funding to enable the country exploit its geothermal power to capacity noting that it was a more potentially attractive renewable energy option.
http://www.constructionkenya.com/wp-content/uploads/2009/04/olkaria-2.jpg (http://www.constructionkenya.com/wp-content/uploads/2009/04/olkaria-2.jpg)A view of Olkaria II

Speaking during the signing ceremony, AFD Director Jean-Marc Gravellini noted that the country faces the challenge of increasing its power output as it must triple its generation capacity in the next 10 years for it to achieve its objectives.
Kenya’s failure to exploit resources like Olkaria leaves the country with the option of relying on imported coal and fuel at its thermal plant at the coast or else import hydroelectric power from Ethiopia.
Gravellini lauded the Olkaria II project as a milestone noting that this was the first time AFD was directly supporting the development of geothermal power (http://www.constructionkenya.com/archives/focus-on-geothermal-power-expansion-in-kenya) in the country to boost the production capacity.
On her part, French Ambassador Elisabeth Barbier hailed the partnership between France and Kenya in numerous fields including water and sanitation, infrastructure and environment and re-affirmed her country’s commitment to enhance the bilateral relationship for the benefit of the two countries.
Ms Barbier pointed out that through AFD, the French government had financed projects in the East African region to the tune of about US$500 million out of which US$400 million was committed to Kenya alone for various development projects.
http://www.constructionkenya.com/archives/kengen-signs-deal-with-afd

KenGen gets approval to issue bond
The Capital Markets Authority (CMA) has approved KenGen’s information memorandum, giving it a green light to raise Sh15 billion through the public infrastructure bond offer (PIBO).

The power distributor’s managing director, Mr Eddy Njoroge, said he was delighted the organisation had been given the go-ahead to issue the bond. “Plans are on course to bring the bond to the market, in an effort to access funds to finance our capacity expansion programme,” Mr Njoroge said.

He added that the details of the KenGen PIBO, which is expected to give both institutional and retail investors an opportunity to participate, will be unveiled in due course. The MD observed that there is a growing appetite for long-term debt instruments, which the company would like to leverage on to finance investments in additional power generation capacity.

KenGen’s decision to seek funds from the debt capital market is a break from the past, where the company relied heavily on development financial institutions to finance its power generation projects. “The debt capital market gives KenGen an opportunity to raise funds to finance our capital expenditure in a flexible manner, while allowing Kenyans to participate in infrastructural development, through an attractive investment opportunity,” he said.

The investment in additional power generation capacity through the bond, is part of KenGen’s five-year strategy of increasing its capacity by 500 megawatts to stabilise the power situation in Kenya. A third power generating plant at Kipevu, Mombasa, estimated to cost 10 million euros (Sh1.05 billion) is one of the projects expected to benefit from the bond.

National grid

The plant is estimated to generate 120 megawatts of electricity, which will be injected into the national grid to boost electricity supply.“This will enable us continue with our critical role of ensuring that there is additional capacity to cope with the rising demand, anticipated at eight per cent annually.

Investment in additional generation capacity will not only help the country cope with additional demand, but also the power demand associated with the implementation of Vision 2030,” Mr Njoroge added.

The transaction team for the bond comprises: KPMG as the financial advisors, Standard Chartered Bank the lead arranger, and Standard Investment Bank as the lead sponsoring broker.

Other members of the team are: Hamilton Harrison & Mathews as the legal advisors, PWC as the reporting accountants, and Ernst & Young as the auditors. Lowe ScanAd and Ogilvy PR are handling advertising and communications.
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