Ruto applies for KSh21bn ($150 million) loan from AfDB
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Ruto administration eying KSh21bn ($150 million) from the African Development Bank (AfDB) for power connection
Ruto administration eying KSh21bn ($150 million) from the African Development Bank (AfDB) for power connection.
Under the third phase of the Last Mile Connectivity project, Kenya is requesting a Sh21.66 billion ($150 million) loan from the African Development Bank (AfDB) to connect homes to power.
In an assessment of the initiative to be implemented before the end of this year to light up an estimated 150,000 houses in 45 counties outside of Nairobi and Mombasa, the AfDB stated that the Treasury had asked for the $150 million.
In an effort to guarantee universal access to power, Kenya Power launched the Last Mile Connectivity initiative in 2015 to connect homes close to transformers to electricity at discounted prices.
The programme will increase Kenya Power’s customers past the nine million mark despite questions over the revenues from homes connected to electricity under the Last Mile plan.
“The Government of the Republic of Kenya is seeking the financial support of $150 million from the Africa Development Bank for the Last Mile Connectivity Project -III,” says AfDB in the disclosures.
The AfDB says some 1,316 new transformers will be purchased, extending the high voltage line by 650 kilometres and 6,798 kilometres for the low voltage network through this funding.
The loan funding, if approved, will be in addition to the Sh26.76 billion that Kenya Power has so far received from three multilateral lenders meant to connect 280,473 households across 32 counties to power.
The French Development Agency gave the electricity distributor a loan worth Sh13.38 billion (€90 million), the European Union gave it a grant worth Sh4.46 billion (€30 million), and the European Investment Bank gave it another loan worth Sh8.92 billion (€60 million) in May.
According to the AfDB, the third phase of the Last Mile program will begin in November and last for approximately five years.
In accordance with the program, the government and the development partners split the cost of the homes’ connections, lowering what households must pay.
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Homes paid an average of Sh35,000 for connection at the start of the project, which was later reduced to an average of Sh15,000.
The AfDB simulations show that the average cost of customer connection for the project will be Sh72,000 under the third phase.
The Last Mile Connectivity program has helped Kenya increase electricity coverage from 2.3 million connections in 2013 to nine million at the end of last year, an electricity access rate of more than 70 percent.
But there have been questions over the economic returns of the project amid low consumption by low-income homes hurting efforts to lift Kenya Power’s electricity sales.
The low-income homes are likely not to plug gadgets like fridges, cookers, microwaves and electric heaters— key drivers of power use in homes—, highlighting the low living standards among a majority of Kenyan households, especially in the rural areas and urban slums.
Kenya Power has in the past said that rural consumers have failed to lift its sales with the utility relying on industrial consumers and wealthy urban dwellers to power its revenues.
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