PRESS RELEASE

A Landmark Guarantee Opens Doors for Long-Term Commercial Financing for Kenya Power

June 27, 2016

NAIROBI, June 27, 2016 – The World Bank, Government of Kenya, Kenya Power and Lighting Company (KPLC) and Standard Chartered Bank of London signed a set of agreements that will allow KPLC to restructure its debt through access to long-term commercial financing. 

This debt restructuring facility is part of $500 million of new commercial financing that will be used to refinance KPLC’s existing debt with a much longer tenor loan and with lower interest rate. In order to facilitate this new commercial loan to KPLC, the World Bank is acting as a guarantor, providing $200 million of International Development Association (IDA) funds as a guarantee to the commercial lenders. Ultimately, KPLC’s financial position will be strengthened with nearly $180 million saved as a result of the debt restructuring, which can be used to take electricity to millions of unserved consumers.

With increased household connections, more children can do homework under electric light, businesses can run at night, and neighborhoods are more secure.” Diarietou Gaye, World Bank Country Director for Kenya “We believe that this Guarantee will help accelerate connections especially to rural and urban poor households.”  

KPLC plans to invest at least a billion dollars in the next five years in its distribution and transmission network to ensure reliable and affordable service delivery for the existing and new customers. 

“We are very happy with this facility. We will ensure that the funds are deployed efficiently to not only upgrade our aging network but to also enhance connectivity as we race toward attaining universal access,” said Dr. Ben Chumo, Managing Director and CEO at KPLC.

This transaction showcases the use of the guarantee instrument in an innovative way to attract new capital for continued investments in power sector.  In Kenya’s case, the World Bank leveraged its own capital – $200 million of IDA resources to raise $500 million equivalent of commercial financing for KPLC.  The $500 million financing facility consists of two tranches - a USD tranche of $350 million with 10 year tenor, and Ksh tranche equivalent to $150 million with 7 year tenor. The facility was arranged and underwritten by Standard Chartered Bank.

This is the first time that a utility in Sub-Saharan Africa is benefitting from a corporate finance syndicated loan, and the first time that an IDA guarantee is used for the financial restructuring of a utility.

Given the long term nature of these infrastructure investments, it is important for KPLC to implement long- term financial planning and optimize its funding sources, including access to commercial financing at lower cost. Leveraging IDA funds in an innovative approach, will help KPLC achieve this,” said Pankaj Gupta, Practice Manager for Guarantees at the World Bank.  

About IDA

* The World Bank’s International Development Association (IDA), established in 1960, helps the world’s poorest countries by providing grants and low to zero-interest loans for projects and programs that boost economic growth, reduce poverty, and improve poor people’s lives. IDA is one of the largest sources of assistance for the world’s 77 poorest countries, 39 of which are in Africa.

Media Contacts
In Kenya
Keziah Muthembwa
Tel : (254-20) 293-6484
kmuthembwa@worldbank.org
In Washington
Aby Toure
Tel : (202) 473-8302
akonate@worldbank.org


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