Rural and low-income Kenyans to benefit from AfDB energy loan

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The Board of Directors of the African Development Bank Group (AfDB) has approved a loan of US $133 million to the Republic of Kenya to increase electricity access for low-income populations, especially those in rural areas. Specifically, the funds will finance the Last Mile Connectivity Project that aims to maximise the use of the Kenya Power and Lighting Company’s (KPLC) 35,000 existing distribution transformers spread across the country. The total project cost is estimated at US $147 million, with the Government of Kenya contributing the remaining US $14 million.

The Last Mile project, which will be launched in March 2015, will support the Government’s initiative, “Energy Access Scale-Up Program” that aims to ensure increased electricity access to Kenyans, particularly among low-income groups. Under the initiative, the existing distribution transformers will be exploited to their maximum by extending low voltage networks to households located in the vicinity of the transformers.

Following the Board’s decision, Alex Rugamba, Director of the AfDB’s Energy, Environment and Climate Change Department, said, “In addition to impeding economic growth, Kenyans’ low level of access to electricity is provoking environmental degradation. Rural residents without electricity are forced to consume biomass, including fuel-wood for cooking and lighting. As a result, there is ongoing deforestation in many areas. This project will increase access to modern reliable and affordable energy supply which will in turn encourage Kenya’s transition to green growth.”

The Last Mile project has three components: (i) construction of the distribution network including installation of energy meters for the connection of residential and commercial customers; (ii) project supervision and management; and (ii) capacity-building activities, which include training KPLC technical staff to operate and maintain the distribution system.

The proposed project will cover the entire country with selected transformers in 47 counties and expected to directly benefit low income groups, largely in counties with the lowest penetration rate. At least 314,200 customers, which would translate into approximately 1,571,000 people, will have access to electrcity. By providing increased electricity access, the project will contribute to improved living standards among targeted households in terms of education, health and access to information. As for small businesses within the project area, the project will also help increase their competitiveness and ability to expand activities.

The electrification ratio in Kenya is low: national electricity access is at 32%, rural electrification access is at 19% and per capita consumption is at 130 kWh as compared with the 550 kWh average for Sub-Saharan Africa.

The Bank has been very active in the energy sector in Kenya with an energy portfolio through public sector financing that is over US $465 million. Moreover, the AfDB has been playing a leading role in financing the implementation of infrastructure projects in the region, including national transmission projects, geothermal development and regional power interconnections. 

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