Kenya-ADB: Mombasa-Nairobi electricity transmission: Approval of $ 75 Million ADF loan
Tunis, May 6 2009 - The Board of Directors of the African Development Fund on Wednesday in Tunis approved a loan of 50 million Units of Accounts, equivalent to US$ 75 million, to finance the Mombasa-Nairobi electricity transmission line project in Kenya.
The project is designed to facilitate the evacuation of power generated in the Mombasa area to Nairobi and into the national grid. The availability of power from Mombasa will help the country meet current shortfalls and future demand growth for electricity nationally.
The project will involve the construction of a 450 km 400 kV double-circuit transmission line between Rabai (Mombasa) and Isinya (60 km from Nairobi), the construction of new transmission lines from Isinya to the Embakasi substation in Nairobi, the expansion of the Rabai and Embakasi substations, and the installation of shunt reactors at Rabai. This will facilitate the evacuation of power from Mombasa to Nairobi and the interconnected system. The transfer capacity will be 330 MW initially with the possibility of upgrading this to 950 MW as national demand for power increases.
The Bank considers support to infrastructure development, especially within the power sector, as a pillar of its strategy in the country. Erratic electricity supply has been identified as one of the most important impediments to the competitiveness of Kenyan firms. Moreover, the government is looking to grow connection rates for households and social institutions in order to improve livelihoods and promote local development.
This project will provide the backbone for the development of power generation capacity around the port of Mombasa and distribution infrastructure nationally to meet the increasing demand for electricity and thereby contribute to economic growth, employment creation, improved social service delivery and quality of life. As such, it is included in the 2008-2012 Country Strategy Paper (CSP) as part of the strategy to improve access to electricity and to meet energy demand at the national level.
The CSP is consistent with the strategy of long-term development and the country's Vision 2030, as well as its five-year plan in the medium-term (2008-2012), in which the extension of electricity infrastructure is among the top priorities.
The project will impact on poverty through the creation of approximately 500 jobs during construction and maintenance of the transmission line and the associated facilities at Rabai. Suppliers of goods and services will benefit through subcontracting and employment created, while services are being provided. At a national level, reliable power supply will benefit economic sectors and boost economic growth (industrial, agricultural, commercial, etc.). Reliable power supply will eliminate the use of emergency power supplies which are costly and environmentally unsound.
The total project cost is estimated at UA 183.83 million (US$ 275.34). The ADF loan represents 27.2% of the costs. Other con-financiers are the French Development Agency (AFD) (27.9%), the European Investment Bank (EIB) (27.91%) and the Kenyan government (16.98%).
* 1 UA = 1.49783 USD 06/05/2009