6 December 2012

Kenya: Ethiopia-Kenya Power Line Gets Sh37 Billion Loan

Finance Minister Njeru Githae and World Bank Country Director Johannes Zutt, addressing the media at Treasury Building after signing a Kshs.51.9 billion loan agreement.

The loan is for construction of Eastern Electricity Highway Project to bring Hydro electric power from Ethiopia to Kenya (Kshs.37.5 billion), The Judiciary Performance Improvement Project (Kshs. 10.2 billion) and the Infrastructure Finance and Public Private Partnership Project (Kshs. 3.4 billion).

WORK on the 1000km long power line between Ethiopia and Kenya will start next year after the World Bank yesterday advanced a Sh37.5 billion loan for the project.

Construction on the the 500kV-transmission line that will connect Kenya's electricity grid to the Ethiopian one is expected to take five years. It is intended to help Kenya overcome perennial power shortages.

Ethiopia has a more stable power output and its power is also cheaper than Kenya's. Kenya hopes the project will lead to lower energy costs and attract more investors.

A government study on the least-cost power development plan by the ministry of energy has recognised that power imports from neigbouring countries are cost effective.

Apart from the transmission line, converter stations will be erected at Wolayta-Sodo (Ethiopia) and Suswa (Kenya), with a power transfer capacity of up to 2,000MW.

The integration of the power systems is hoped will create a "power pool" plugging into Ethiopia's massive hydro-power resources, enabling Ethiopia to sell its surplus electricity to Kenya.

The $1.26 billion (Sh107.1 billion) cross-border power line will be co-financed by the two governments, World Bank, AfDB and the French Agency for Development.

In September, the African Development Bank approved a $348 million (Sh29.5 billion) loan for part financing of the cross-border electricity infrastructure project. The Treasury is expected to sign the official loan today with the AFDB.

The Eastern Electricity Highway Project is intended to promote electricity trade between East African economies whose energy demand is expected to rise in less than a decade. The interconnection will eventually bring on board Uganda which is linked to Kenya currently.

"It is our desired plan that in the long term, the power transmission network will be interconnected between countries with energy potential and those countries with lower energy sources making electricity cheaper and accessible to more people in the region," said finance minister Njeru Githae yesterday.

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