March 31, 2010
1. On March 31, Japan International Cooperation Agency (President: Sadako Ogata) signed a Japanese ODA Loan Agreement with Kenya Electricity Generating Company Ltd at Nairobi to provide up to 29.516 billion yen for the Olkaria I Unit 4 and 5 Geothermal Power Project. The World Bank, the European Investment Bank and the German Development Bank (KfW) are considering their participation in the project as co-financiers.
2. This project is to expand the existing Olkaria I Geothermal Power Station by installation of power generator units 4 and 5, 140MW in total in Rift Valley Province of Kenya (about 75 km northwest of Nairobi). As Kenya has a power demand growing at an annual rate of roughly 5% for the past five years, construction of a new power system is urgently needed in order to meet its increasing demand for power in the future. In addition, due to its heavy dependency on hydro-generation which consists over 70% of its gross electricity generation, the energy sector in Kenya faces a challenge in maintaining stable nationwide power supply without being affected by weather conditions.
3. This is the first project supported by the Climate Change Japanese ODA Loan in Sub-Saharan Africa. Geothermal power is a system in which fluids, a mixture of hot water and steam, are extracted from geothermal heat stored in deep layers of the earth and its steam is used to drive turbines. It emits less carbon dioxide and attracts attention as an environmentally friendly energy. With limited natural resources in Kenya, geothermal power development was launched in the 1970s as an alternative energy for hydraulic and thermal power. Since the existing Olkaria I Geothermal Power Station was put into operation in 1981, 165MW geothermal power has been developed.
4. The countries in Sub-Saharan Africa including Kenya have been suffering from adverse impacts of climate change such as frequent droughts and floods. In 2009, the Government of Kenya formulated the National Climate Change Response Strategy, which spelled out mitigation measures featuring renewable energy and afforestation as well as forestation and adaptation measures in health, agriculture and water. In particular, the promotion of geothermal power, which is estimated to have a potential of 7,000MW in Eastern Africa, is the main solution under the Strategy.
5. In the Fourth Tokyo International Conference on African Development (TICADIV) in 2008, the Japanese government announced the policy for “promotion of the use of clean energy and improvement of energy access” in Africa. Based on the policy of the Japanese government, JICA is exploring possible assistance in a compatible manner conducive to enhancing both economic growth and climate change mitigation measures for developing countries that make endeavors to address the issue of climate change.