Kenya to spend parts of newly raised money on geothermal

Alexander Richter 20 Feb 2009

After a successful first infrastructure bond issuance in February, Kenya’s finance minister is planning on selling more bonds in the country and abroad to fund development, which includes geothermal wells, so reported by Reuters.

Finance Minister Uhuru Kenyatta said the 18.5 billion shilling (US$232.6 million) 12-year infrastructure bond was oversubscribed by 45 percent, attracting an average interest rate of 13.5 percent.

Bankers said the demand for the infrastructure bond showed there was plenty of liquidity in the market and future issues were also likely to appeal to investors.

‘They can see we need roads and all those things. As long as the government comes to them with a clear and proper case, they are ready to understand,’ said John Ngumi, director of investment banking, Africa, at Standard Bank in Nairobi.

Funds from the 12-year bond will be spent on construction of water supplies, sewerage systems, dams and irrigations projects in an economy that is underpinned by agriculture. Creaking infrastructure in many sub-Saharan African countries is seen by rating agencies as an obstacle to growth and can deter foreign investors and businesses.

Part of the money will be spent on the construction of several roads, the drilling of geothermal wells for power generation, new transmission lines for the national grid and rural electrification. This follows the news posted earlier Kenya setting up geothermal unit (GDC), that talked about a streamlining of Kenya’s power sector and the creation of a geothermal unit.

Source: Reuters