Personal tools

Kenya, Rabai Oil-fired Power

Financing a 90MW oil-fired power plant to supply Kenya's growing economy with reliable base-load power.

The Rabai Power plant is one of the cleanest and most efficient thermal fuel plants in East Africa. By financing the 90MW heavy fuel oil-fired plant – with the eventual aim of conversion to natural gas (LPG) – the Rabai Power Project delivers vital power necessary for Kenya’s economic growth.

BACKGROUND

The poor state of Kenya's power supply constrains the country's socio-economic development at a time when demand for power is increasing rapidly. Kenya relies heavily on hydro power which is susceptible to seasonal fluctuations and the effects of climate change. The existing hydro power generation system cannot meet demand and supply is unreliable. The Government of Kenya has to subsidise expensive emergency power from diesel generators.

The Rabai Project, located near Mombasa, has involved the development, financing, construction, operation and maintenance of a 90MW Heavy Fuel Oil-fired power plant, which can be converted to run on natural gas, once LPG becomes available in the country. The project was developed in response to a request for proposals issued by Kenya Power and Lighting Company (KPLC), the public utility company, following the adoption of a Least Cost Power Development Plan for Kenya.  The plant has been fully operational since 2010. KPLC purchase all of the Rabai Project’s generated electricity and are responsible for its transmission, distribution and retail throughout Kenya.

THE DEAL

The total investment in the Rabai Project came to €111.31 million. Of this, €26.67 million (24%) was funded through a combination of commercial equity (14%) and equity from development finance institutions (10%). The remainder of the financing has been arranged through 15-year senior and subordinated loans from development finance institutions, including the Emerging Africa Infrastructure Fund (EAIF), FMO (from the Netherlands), Proparco (from France) and DEG (from Germany).

PIDG POSITION

PIDG company EAIF was the lead arranger for this transaction, lending €22.57 million to the project. In addition, EAIF coordinated a development finance institution consortium providing further long term debt to the project through FMO, Proparco and DEG - bringing the total debt financing to €84.64 million

DEVELOPMENT IMPACT

Private Sector investment

Total commitments

 

US$163.78m

Fiscal benefits

The project increases government revenue through Corporate Tax, Withholding Taxes, Import and Stamp Duties.

Government subsidies required for expensive emergency generation of power have been dramatically reduced.

It has improved the state of power supply in Kenya which, in turn, drives economic development in the local economy and export sector

Job Creation

Construction

Operational

 

300 people

70 people

Additional Benefits

The plant’s 90MW output reliably provides quality power to up to 400,000 households or 2.3 million people.

The plant’s design has set new standards, meeting stringent international environmental and social requirements.

The project has the ability to convert to gas once it becomes available in Kenya, which has substantial environmental and economic benefits.

The project supports a range of corporate social responsibility initiatives targeting education, health interventions and water supply.