Kenya is racing to build two privately-owned KSh37.65 billion ($298 million) power transmission lines covering 237 kilometres, which will be a first in Africa.
The public-private partnership (PPP) project is being developed by pan-African investment firm Africa50, with Power Grid Corporation of India Limited being a technical and minority equity partner.
“The government of Kenya in partnership with Africa50 through a PPP framework intends to pilot transmission line PPPs by way of the financing, design, construction, operation, and maintenance of the 400KV, 165km Loosuk-Lessos transmission line and the 220KV, 72km Kisumu-Musaga transmission line. The project will also incorporate associated infrastructure such as electricity substations,” the National Treasury said in its 2023 Budget Policy Statement.
Loosuk is in Samburu County, Lessos in Nandi County while Musaga is in Kakamega County.
Africa50 currently has 31 shareholders comprised of 28 African countries, the African Development Bank, Central Bank of West African States and Bank Al-Maghrib. Power Grid is a listed company that is majority-owned by the Indian government, which has a 51.34 per cent stake.
The two projects will cost $300 million.
The operation of the two lines is aimed at improving power system reliability and promoting electricity access in the Western region.
The project will be the first independent power transmission in Kenya and comes at a time the government is betting on private capital to undertake big-money infrastructure projects amid a cash crunch at the exchequer.
The World Bank reckons Kenya has a financing gap of at least 90 per cent amounting to $5.9 billion (KSh724 billion) to fund new power transmission projects between 2013 and 2030, an investment the government cannot meet alone, said the lender.
The fully state-owned Kenya Electricity Transmission Company (Ketraco) is currently the sole firm charged with building, maintaining and operating high-voltage transmission infrastructure within the country. It primarily relies on state funding and wheeling revenue – which amounts to about KSh2.6 billion ($20.6 million) each year – to fund its operations.
In the PPP model, the private firms will sign long-term contracts with Kenya Power to earn wheeling revenue from electricity transmitted through their power lines.