AfDB Supports Clean Energy and Road Infrastructure Development in Kenya with U.S.$ 336M Finance

16 March 2012
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African Development Bank (Abidjan)
press release

The African Development Bank (AfDB) and the Kenyan government signed loan and grant agreements totaling some USD 336 million in support of clean energy and road infrastructure development in Kenya on 12 March.

The financial package includes a USD 186.7 million loan for the Mombasa-Nairobi-Addis Ababa Road Corridor Project and a USD 149.5 million loan and grant financing for the Menengai Geothermal Development Project.

The signing ceremony was led by the Kenyan minister of finance, Mr. Robinson Githae, accompanied by the minister for roads and other top government officials. Mr. Gabriel Negatu, director of the Bank's regional center in East Africa, based in Nairobi, represented the AfDB.

The first loan agreement, under the African Development Fund (ADF), the 'soft loan' arm of the AfDB Group, supports the third phase of the multinational project Mombasa-Nairobi-Addis Ababa road corridor covering the Turbi-Moyale section. The road corridor is part of the Trans-Africa Highway network that aims at promoting cross-border trade, regional integration, and to alleviate poverty through highway infrastructure development and the management of road-based trade corridors.

This third and final phase of the project involves the construction to bitumen standard of some 320km of the road corridor, including the 122km Turbi-Moyale road section in Kenya and the 198km Hawassa-Ageremariam road section in Ethiopia. The loan will also cover transport and trade facilitation consultancy services geared at harmonizing cross-border procedures at the border.

Expected benefits of this project include a minimum 25 percent increase in intra-COMESA and increased trade between Kenya and Ethiopia by at least 200 percent by 2017. An average increase in household incomes of at least 10 percent by 2020 is also anticipated.

The second loan agreement, for the Menengai Geothermal Development Project, consists of an ADF loan of USD 124.5 million, and a loan and grant totaling USD 25 million from the Scaling-Up Renewable Energy Program (SREP) under the Climate Investment Funds for which AfDB Group is an implementing agency.

The Menengai geothermal development project will set the stage for investments that will help meet Kenya's rapidly increasing demand for power and transform the country into a competitive clean energy economy. It will also help diversify the country's sources of power supply by developing the Kenya's substantial geothermal potential.

The Menengai field alone has a potential of up to 1600MW, and the AfDB Group support will help develop the steam field for generation capacity of up to 400MW in a first phase, which is represents a 20 percent increase in installed capacity of the country.

The steam field development will result in substantial increase in the provision of reliable, clean and affordable energy equivalent to the current consumption needs of 500,000 Kenyan households -- of which 70,000 will be in rural areas--300,000 small businesses and some 1,000 GWh to other businesses and industries. The project will also help reduce emissions of some 2 million tons of CO2 per annum.

The signing of these agreements totaling USD 336 million brings the ADB's combined support to Kenya's Energy and Transport sector close to USD 1.4 billion.

The minister for finance acknowledged AfDB's support over the years, that it contributes immensely to the development of Kenya's road networks and to the diversification of the country's energy sources.

The minister for roads, Mr. Frankline Bett, commended AfDB for its timely and necessary support for the Turbi-Moyale road section.

Mr. Patrick Nyoke, permanent secretary at the ministry of energy, thanked AfDB for its support in the development of the Menengai project, which he said is key to the development of the geothermal energy resources of the country.

Mr Negatu, reiterated the Bank's steadfast commitment to work with the Kenyan government as a trusted partner, fully supportive of its development priorities within the framework of Vision 2030 and underscored the significance of these projects to the well-being of the Kenyan people.

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Chawki Chahed

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