Ormat secures increased MIGA insurance coverage for Olkaria extension in Kenya
The political risk insurance arm of the World Bank, MIGA, announced an increase in insurance coverage for Ormat Technologies' power plant and subsequent extensions to $134 million.
In a release “The Multilateral Investment Guarantee Agency (MIGA), the political risk insurance arm of the World Bank Group, announced its continued support for a geothermal power project that is providing clean, renewable energy in Kenya—a country facing ongoing energy shortages.
MIGA has been insuring OrPower 4 Inc.’s power plant in Kenya’s Olkaria geothermal fields since 2000. The agency recently increased its coverage against the risks of transfer restriction, expropriation, and war and civil disturbance to cover an additional equity investment of $110 million for phase three of the project. MIGA’s total gross exposure under the project now stands at $134 million. The facility is the first privately provided geothermal power plant in sub-Saharan Africa, and with the completion of the planned phase three expansion in 2013, the total combined generation capacity will be 84 megawatts.
Kenya’s energy deficit is inhibiting the country’s potential for growth and development. The country is heavily reliant on hydropower, which is seriously constrained during droughts like the current one. As a result, the country imports costly fossil fuels to fill the growing demand for electricity. An increase in indigenous geothermal generation will guarantee a more reliable supply of energy while also reducing CO2 emissions. The existing plant has been registered as a “Clean Development Mechanism” project with the United Nations Framework Convention on Climate Change with an expected annual CO2 reduction of 180,000 tons per year.
At a signing ceremony in Washington, Yehudit Bronicki, President of Ormat Holding Corporation, said “MIGA’s continued participation in the project is critical. With MIGA’s involvement, the political risk profile of the project is much lower, allowing us to focus on our day-to-day operations.”
MIGA Executive Vice President Izumi Kobayashi said “We are committed to the continued success of this investment that is bringing the electricity needed to support Kenya’s growing economy. We also recognize the important work the company is doing with the local Maasai community to provide support for schooling and early childhood development.”
More information about the project and MIGA’s support can be found here.