EIB prepares $190m commercial loan for 70 MW Akiira Geothermal Project in Kenya

As reported by local media in Kenya, the European Investment Bank has said to have offered a EUR 155 million (Sh19.5 billion, $190 million) loan to Akiira Geothermal Ltd. The company is developing the 70 MW Akiira geothermal project, a private investor driven project in Akiira Vallye in Naivasha, Kenya.

“The loan is under commercial terms but will be lower than 10 per cent interest in EUR after risk pricing,” said EIB East Africa head Catherine Collin on the sidelines of an energy conference in Nairobi this week. The project has an estimated project cost of EUR 310 million ($380 million).

The project has a power purchase agreement for Sh9.5/ kWh ($0.09237 kWh) signed in August 2015 with electricity distributor Kenya Power. The project is being financed through a mix of debt (70%) and equity (30%), according to the executives.

Akiira was to start power generation by December 2016 but suffered delays after exploration of its initial wells yielded less steam, prompting further drilling and tests.

The company started exploration in August 2015, targeting to drill up to 15 steam wells, each with an average capacity of 5 MW, bringing the expected installed capacity to about 75 megawatts.

Centum Investments (listed on the Nairobi Stock Exchange) owns a 37.5 per cent equity stake in the Akiira consortium, with the remaining 62.5 per cent owned by American firms Ram Energy, Marine Power, and Danish company Frontier Markets.

The Centum consortium is expected to contribute Sh11.7 billion or 30 per cent of the project’s cost of EUR310 million (Sh39 billion/ $380 million) while the rest will be funded through commercial loans.

The geothermal project is partly funded by former US President Barack Obama’s Power Africa initiative for lighting up the continent.