The Board of the African Development Bank (AfDB) has approved the Lake Turkana Transmission Line Delay Partial Risk Guarantee for Ksh2.3 billion, which marks as the first of the African Development Fund’s Partial Risk Guarantees (ADF PRG). The ADF PRG is a risk mitigation instrument that covers private lenders and investors against the risk of a possible government failure to meet contractual obligations to a project.

Speaking after the Board meeting, Kurt Lonsway, Acting Director of the AfDB’s Energy, Environment and Climate Change Department, said, “This ADF PRG will promote foreign direct investment in Kenya and crowd in private financing for power generation. Also, by reducing the risk profile for the sponsors of and lenders to the Lake Turkana project, the PRG will accelerate financial closure and reduce the overall cost of capital to the project.” 

This flagship will support the Lake Turkana Wind Power Project  which involves the development of a 300 MW wind farm comprising 365 wind turbines of 850kW capacity each and a 33kV electrical network. The average electricity production of the project is estimated at 1,440 GWh per year, equivalent to the annual generation capacity of Namibia in 2010, and will be sold to the grid at a price of Ksh8.65/Kwh.

Under the wind project, the Lake Turkana Transmission Line Delay PRG will be used to alleviate the risk for the construction of a 428-kilometre publicly owned transmission line between Loyangalani and Suswa and associated substations needed to connect the project to the national grid. The transmission line will also include a fibre-optic cable that will carry communications data.

The project is  set to provide clean, reliable, low-cost power and to strengthen Kenya’s national grid by increasing national installed power by approximately 17%.Over the long term, the project will help decrease the cost of energy to end-users, increase access to energy in rural areas, increase the national electrification rate, reduce CO2 emissions, and decrease fossil fuel dependence.

AfDB provided approximately over Ksh13 billion (€115-million) loan to the Lake Turkana project and has led its development since 2009. (Read also: Bank approves €115 million Loan for Turkana Wind Power Project)

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