Kenya: Private Investors to Add 80 Megawatts To National Grid

Transformer serving this blogger in Migori County, Kenya

The World Bank and private investors are set to add 80 megawatts to the national grid in 12 months through Gulf Power Ltd’s thermal plant in Mombasa Road, near Athi River.

Gulf Power has brought local investors from Gulf Energy Ltd and Noora Power Ltd in the Sh9.12b project which includes Sh2.7b in equity investments and Sh6.4b long-term debt financing.

WB gave the project a major boost through Sh4b loan which will be repaid for more than 15 years.

Already Gulf has signed a power purchase agreement with Kenya Power and Lighting Company (KPLC) for electricity it will generate. The agreement was also signed by the government, WB and JP Morgan Chase Bank N.A. of London.

“The WB has now signed partial risk guarantees for a third private power producer to increase the availability of electricity and diversify country’s power,” Johannes Zutt, World Bank Country Director for Kenya said.

The move will increase stability of supply of electricity to help businesses grow and create jobs for citizens.

The Gulf Power loan approved in February last year is among WB’s loan with other projects benefiting being Thika Power and Triumph Power Generation which were finished on August and December 2012 respectively.

“The loan supports innovative public-private partnership program that helps African countries to unlock their energy potential and improve competitiveness,” Lucio Monari, World Bank Sector Manager for Energy in the Africa Region explained.

The government plans to increase private sector participation and utilize low carbon resources such as wind and geothermal to increase electricity generation capacity by an additional 2,000Mw.

Manuel Odeny © 2013

Business: African Migrants to benefit from reduced remittance fee – World Bank

An illegal African immigrants being frisked after landing in Europe PHOTO: Courtesy

BAfrican migrant workers in European Union countries and their families back home are set to save US$4 billion annually after remittance costs are reduced to 5 percent from the current 12.4 percent.

The benefit comes after G8 and the G20 established 5 percent as the target average remittance price to reach by 2014 which is set to benefit African migrants, who pay most to send money home than any other migrant group most.

World Bank in a press release said that in 2012 Africa's overseas workers sent close to US$60 billion in remittances in 2012 although the Sub Sahara region is the most expensive to send money to for migrants.

WB’s Send Money Africa database said the average cost of sending money to Africa is almost 12 percent- higher than global average of 8.96 percent, and almost double the cost of sending money to South Asia, which has the world's lowest prices at 6.54 percent.

The move is expected to increase remittance which will benefit millions of Africans.

“Remittances play a critical role in helping households address immediate needs and also invest in the future, so bringing down remittance prices will have a significant impact on poverty,” said Gaiv Tata, Director of the World Bank's Africa Region and Financial Inclusion and Infrastructure Global Practice.

Tata observes that this lower cost in remittances is set to advance financial inclusion by increased use of other financial services like opening accounts and borrowing loans since remittance are often the first financial service used by recipients.

WB said that banks which are often only channels available for African migrants are the most expensive remittance service providers and the reduced cost which will dome with a regulatory environment will encourage competition among other remittance service providers.

Under such an environment migrant workers, Africans included will benefit from more transparent information on remittance services.

Manuel Odeny © 2013

AfDB approves Sh29.4 billion for Kenya-Ethiopia electricity project

By Manuel Odeny

September 23, 2012

The African Development Bank (AfDB) has approved a Sh29.4 billion funding for the electricity highway project to Kenya from Ethiopia’s Gibe III dam project last week on Thursday.

The funding comes barely two months after the World Bank approved a Sh58billion loan that Ethiopia and Kenya needed to build a 20,000-kilometer high-voltage power line between the two countries.

The project seeks to increase supply of electricity in East Africa region which has seen demand rising steadily due to increased population that has caused severe power shortages.

“In Kenya… the additional power injected into the national grid will enable the supply of electricity to an additional 870,000 households by 2018, and a cumulative total of 1.4 million additional households by 2022, of which 18 per cent will be located in rural areas,” AfDB said in a press statement after its board approved the funding.

In the statement the bank also says businesses and industries will also benefit, with around 3,100 GWh of additional energy by 2018, increasing to around 5,100 GWh by 2022.

 “The project is intended to promote power trade and regional integration, contribute to the Eastern Africa Power Pool (EAPP) countries’ social and economic development, and reduce poverty in those countries,” the bank said

Apart from the two banks other co-founders of the Sh106.5 electricity highway includes which is set for commissioning in November 2017 include the French Development Agency (AFD) and the Governments of Kenya and Ethiopia.

Once finished the project will involve construction of a 1,068 kilometre high-voltage direct current 500 kV transmission line between the two countries and putting up of associated converter stations at Wolayta-Sodo in Ethiopia and Suswa in Kenya.

The line will be able to transmit a power capacity of up to 2,000 MW.

 “We have mobilized funds from other development partners in a timely and efficient manner. The project… has the potential to replace some fossil-fuelled thermal generation in the East African region,” Gabriel Negatu, AfDB’s Regional Director in charge of East Africa said.

It’s estimated that once finished the project will position Ethiopia as the main powerhouse and Kenya as the main hub for power trade in the East African region, Southern Africa, Egypt and Sudan.

 “The East African region is blessed with abundant hydropower and geothermal energy resources which with the implementation of this flagship project will establish pooling of energy resources at the regional level to create a regional electricity market through power trading,” said Thierno Bah, AfDB’s Senior Power Engineer.

The project have received a go ahead even after human rights and environmental activists said the Gibe III damn has been controversial by forceful evictions of locals and its effect on flora and fauna in the River Omo.

Human Rights Watch raise concerns over Kenya, Ethiopia Gibe III dam project.

Ethiopian herders at the lower end of the Omo river where the controversial dam Gibe III is set to be built

Kenya’s quest to get power from Ethiopia’s Gibe III dam project by 2014 may receive a setback after Human Rights Watch wrote to World Bank, a major financier against the project.

The rights watchdog have written to WB saying they should stall the funding of the 1,000 kilometer transmission line to the country from the 240m high dam, tallest in Africa, in Southern Ethiopia with a capacity to produce 1,870 megawatts of electricity citing abuse of human rights.

But yesterday Thursday WB agreed to fund the project even though it doesn't meet its project assessment.

 “The World Bank should ensure that the rights of indigenous peoples and the environment are rigorously protected before funding a power transmission line connecting Kenya to the controversial dam in Ethiopia” Human Rights Watch said in a letter to President Jim Yong Kim ahead of Thursday meeting on the project.

“The World Bank shouldn’t think that it’s fine to fund a transmission line while closing its eyes to abuses at the power source, where rights of hundreds of thousands of indigenous people are threatened by the Gibe III dam without protection ” Jessica Evans, senior international financial institutions advocate at HRW said in statement posted on their website.

The project is set to double Ethiopia's current power generating capacity which will see excess power being exported to neighboring countries like Kenya whose 80 percent of the population don’t have access to electricity.

Apart from exporting the power, the Ethiopian government is going to use power from the dam supplied by the Omo River which also gives 90% of Lake Turkana water, to supply electricity for her 245,000 hectares of state-run irrigated sugar plantations and other projects.

According to HRW “the dam and related agricultural plans are also likely to dramatically decrease water levels in Kenya’s Lake Turkana to further increasing competition over scarce resources for the additional 300,000 indigenous people who live around Lake Turkana.” The statement says.

The site of the Gibe III dam

Apart from Kenya there have been serious implications of Ethiopia’s sugar plantations project where over 200,000 indigenous residents of the Lower Omo have been forcefully relocate by security forces to affect the loss of grazing land and cultivation sites as they rely on the 760KM long Omo River for their survival.

“State security forces have used intimidation, assaults and arbitrary arrests when people questioned the relocation or refused to move even though The United Nations in 1980 named the area a World Heritage because of its special cultural and physical significance” the statement says.

WB requires that projects it funds should follow and mitigate against adverse environmental and social impacts especially if it will affect loss of livelihood by calling on adequate compensation to at least maintain their previous living standard.

“WB is set to undermine these policies by approving the power transmission line to Kenya with the source of energy highly questionable” the statement says adding that environmental and social assessment should be done on the project on indigenous people before funding the transmission line.

Jim Yong Kim the 12^th WB president who took the office on July 1 is faced with his first big test to commitment to human rights and environment issue on the funding of the transmission line to Kenya.

 “Kim should show the people of Ethiopia and Kenya that he will stand for their rights. That means not letting this project proceed until the bank has taken adequate steps to prevent serious harm to peoples’ rights and livelihoods” Evans, the HRW official says.

©Manuel Odeny 2012