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Japan Bank for International Cooperation (JBIC) has signed an ODA loan agreement amounting to Y10.554bn with Kenya Electricity Generating Company for the Sondu/ Miriu Hydropower Project II. This loan is the second phase of a loan signed in March 1997 for the first phase of this project.

The project consists of the construction of a run-of-the-river hydropower plant with a capacity of 60MW (two 30MW generators) in the region straddling Nyando and Rachuonyo districts in the western part of Kenya. The proceeds of the loan will be used to finance civil works for the penstock, powerhouse and outlet channel, and so on; procurement of generators and other equipment; construction of transmission lines and substations; and consulting services.

Kenya is facing tight power supply due largely to aging power plants. To overcome the power shortage, the country is purchasing electricity from neighboring Uganda. However, it is foreseen that with growing domestic power demand, Uganda will find it difficult to further increase the export of power. The national power development plan projected that power demand will grow by an average of about 5% annually in the next 10 years.

Under these circumstances, it is crucial that Kenya develop hydropower as a domestic source of energy, for a country that does not domestically produce fuel resources, such as coal and oil. This project was assigned the highest priority by the national power development plan drawn up by the government and the Economic Recovery Strategy unveiled in June 2003 by the government of President Kibaki, which came to power at the end of 2002.

In the Medium-Term Strategy for Overseas Economic Cooperation Operations (FY2002-04), JBIC accorded priority to “developing infrastructure for economic growth”, focusing its support on the development of economic and social infrastructure. It is expected that this project will help Kenya to move toward achieving stable power supply, thereby contributing to its sustained development.