Africa50, government of Kenya to build Sh37.7billion electricity line under PPP model
The government is set to build two privately-owned Sh37.7billion electricity lines covering 237 kilometres under a public-private partnership (PPP) model.
The PPP project which will be a first in Africa is being developed by Pan-African investment firm Arica50, with Power Grid Corporation of India Limited being a technical and minority equity partner.
“The government of Kenya in partnership with Africa 50 through a PPP framework intends to pilot transmission line PPPs by way of the financing, design, construction, operation, and maintenance of the 400KV, 165km Loosuk-Lessos transmission line and the 220KV, 72km Kisumu-Musaga transmission line. The project will also incorporate associated infrastructure such as electricity substations,” the National Treasury said in its 2023 Budget Policy Statement.
Currently, Africa50 has 31 shareholders consisting of 28 African countries, the African Development Bank, Central Bank of West African States and Bank Al-Maghrib.
Power Grid is a listed company that is majority-owned by the Indian government, which has a 51.34 per cent stake.
In the PPP model, the private firms will sign long-term contracts with Kenya Power to earn wheeling revenue from electricity transmitted through their power lines.
The two projects will cost $300 million and is aimed at improving power system reliability and promoting electricity access in the Western region.
Kenya, according to the World Bank has a financing gap of at least 90 per cent amounting to $5.9 billion (Sh724 billion) to fund new power transmission projects between 2013 and 2030 which according to the lender is an investment the government cannot meet solely.
The cash-strapped Kenya Electricity Transmission Company (Ketraco) is currently the only firm charged with building, maintaining and operating high-voltage transmission infrastructure within the country.
It mostly relies on state funding and pushing revenue which amounts to about Sh2.6billion ($20.6 million) each year to finance its operations.
