The World Bank has approved a US $300M interest-free loan to Kenya Power to help the utility pay off its debts, revamp its ageing transmission network, expand the national grid, and reduce system losses.
The loan is part of funds that will be released through the Treasury under a seven-year program called Green and Resilient Expansion of Energy. This funding will allow Kenya Power to reduce its debts to electricity producers, suppliers, and other agencies while continuing the Last Mile connectivity program and establishing smart meters and a two-way communication system to improve monitoring of energy flow.
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Kenya Power’s debts
The World Bank’s loan will also cement its position as a critical financier of the utility. Kenya Power’s current system losses are at 19.4% and plans to reduce this to 13.4% in the next three years.
“The Program will also support gradual clearing of outstanding dues of KPLC to other sector agencies such as KETRACO and REREC towards achieving financially sustainable sector operations. KenGen, IPPs and other suppliers will benefit from reduced arrears. It is expected that the Automated Metering Infrastructure rollout expansion and metering at distribution feeders supported under the Program will further help to improve monitoring of energy flow and reduction of losses,” said World Bank.
Kenya Power’s debt to electricity producers and other suppliers was US $652M in the year ended June 2022 and it had US $762M in loans from local and foreign banks in the same period. The debt to KenGen for electricity supplies as of June last year was US $168M, making it the biggest amount owed to a single power producer. Kenya Power owed other electricity producers US $168.4M in the period.