March 9, 2016
Honorable Cabinet Secretary Henry Rotich of National Treasury and JICA Chief Representative Ms. Keiko Sano smile after signing the Loan Agreement
On March 9th, 2016, Japan International Cooperation Agency (JICA), on behalf of the Japanese people, signed a Loan Agreement (L/A) of 45.690 billion Japanese Yen* (approx. 40 billion Kenyan shillings) for the construction of Olkaria V Geothermal Power Plant.
Honorable Cabinet Secretary for National Treasury, Mr. Henry Rotich signed on behalf of the Government of Kenya, and JICA's Chief Representative Ms. Keiko Sano signed on behalf of JICA.
The aim of this assistance is to enhance the volume and security of power supply in Kenya by constructing a 140 MW geothermal power plant, thereby creating a conducive investment climate and enabling sustainable economic growth in Kenya. The financing will be utilized by KenGen to construct a 140 MW geothermal power plant, steam gathering system, a transmission line and substation in Olkaria.
This loan is the largest amount of JICA ODA loan since Japan started Official Development Assistance in 1963, and expresses Japan's strong commitment to assist developing countries' sustainable economic development through environmentally friendly means.
Speaking shortly after the signing ceremony, Ambassador Terada expressed confidence in Kenya's efforts towards creating a conducive environment for investment and development.
Olkaria I Units 4 & 5 (140MW), commissioned in January 2015, also financed by JICA.
"This is so far the biggest amount extended to a project in Kenya by the Government of Japan, and therefore demonstrates our growing confidence and friendship with Kenya," he said.
Mr. Rotich praised Japan's commitment to Kenya's development agenda, adding that the East African nation had received on a cumulative basis financial support amounting Ksh 472.7 billion from the Japanese government, making it one of its major bilateral partners.
"Once complete," he said, "the Project will contribute to the realization of the Vision 2030 which aims at transforming Kenya into a middle income country."
The concessional loan will be provided by JICA, at an annual interest rate of 0.2%, with a repayment period of 30 years including a grace period of 10 years.
Kenya Electricity Generating Company (KenGen) will be the executing agency for the project, which is scheduled to complete and connect to the national grid in 2019. The project will add another 2 units of a total of 140MW to the already existing geothermal power plants in Olkaria, which have an installed capacity of 513.4MW, currently accounting for more than 50% of the power being consumed by Kenyans.
Today, Kenya's electricity generation capacity stands at approximately 2,350 MW. 296 MW of this has been financed by Japan through concessional ODA Loans to KenGen, namely, Kipevu I Diesel Power Plant (75 MW), Sondu Miriu Hydropower Plant (60MW), Sangoro Power Plant (21MW), and Olkaria I Units 4/5 Power Plant (140 MW).
Speaking at the Signing Ceremony, the Chief Representative of JICA Kenya Office, Ms. Keiko Sano noted that geothermal is the energy resource of choice for Kenya and a priority area for JICA's financing. Thanks to the new geothermal power generation replacing the diesel power plants, the Fuel Cost Charge (FCC) reduced by 60% between July 2014 and February 2015 and the cost of electricity has dramatically reduced, which benefit the households and the industries all over Kenya.
In addition to power generation, Japan supports Kenya's energy sector comprehensively by financing the Olkaria-Lessos-Kisumu Transmission Lines, and providing technical assistance on geothermal to Geothermal Development Company (GDC), JKUAT-Institute of Energy and Environment Technology (IEET), and Rural Electrification Authority (REA), in order to enhance Kenya's capacity in geothermal development and other renewable energies.
JICA is committed to continue providing optimal solutions to Kenya's development of clean and efficient energy, and the improvement of Kenyan livelihoods.
Honorable CS Henry Rotich, Honorable CS Charles Keter of Ministry of Energy and PEtroleum, PS of National Treasury Dr. Kamau Thugge, Eng. Albert Mugo MD & CEO of KenGen, H.E. Ambassador Tatsushi Terada, and JICA Chief Representative Ms. Keiko Sano pose for a photo
JICA Chief Representative Ms. Keiko Sano commends KenGen for being a strong partner in providing clean and stable power to Kenyans.