The International Finance Corporation (IFC) has arranged €58mn in debt finance for a power plant in Kenya.

The loans will be made to Gulf Power as part of the ongoing independent power project (IPP) near Nairobi. The IFC will contribute €16.6mn of the loans itself, with €20.7mn coming from each of Opec Fund for International Development (Ofid) and a syndicate of commercial lenders, led by Standard Bank.

Each of the loans is on a non-recourse basis with a tenor of 15 years, priced at 475 basis points over Libor.

The 80MW plant will supply electricity to Kenya Power and Lighting Company, the national distributor, and will use heavy fuel oil. The IFC hopes that it will help reduce Kenya’s frequent power outages, which it estimates knock 2% off the country’s GDP every year. It’s the second such plant funded by the bank this year.

Asad Yaqub, senior investment officer at the IFC, tells GTR that the landscape for investing in Kenya has changed a lot since he helped arrange the first IPP project in Sub-Saharan Africa in 1999.

He says: “There’s still a lack of commercial financing available for Kenya, but there’s been progress. It’s much better than it was 13 years ago, when we couldn’t raise a single dollar. Now we’re able to arrange €20mn.”