AfDB approves €26.1mln loan for construction of Ethio-Kenya power lines

Addis Ababa, July 4, 2023 (FBC) – African Development Bank (AfDB) has approved a 26.1 million euros loan to construct an underground power transmission line as part of the Ethiopia-Kenya electricity highway to boost power supply at the Kenya’s Laikipia Airbase and surrounding areas.

The pan-African lender disclosed its review of the Kenya-Ethiopia electricity highway project, saying the 132 kilovolts underground cable network stretching 16.5 kilometres will link Nanyuki and Rumuruti substations in Kenya.

The substation, whose completion is targeted before the close of next year, is part of integrating the Ethiopia-Kenya Power Interconnection project as Kenya ramps up electricity imports from Ethiopia.

“Procurement activities have been completed and the contract signed. Preliminary design work is currently underway,” AfDB said in a review of the project.

Kenya sought the loan due to underestimation made on the feasibility study on power demand growth, an increase in electrification rate and generation capacity, resulting in an overrun of the initial project cost estimates, according to Daily Business Africa.

Construction of the underground cable network comes months after the completion of the 400kV Mariakani substation that was opened in January.

Recall that Kenya started importing electricity from Ethiopia last year in a bid to cut reliance on expensive thermal power and ensure adequate supplies in the wake of rising demand.

The two countries signed a 25-year deal for electricity imports, with Kenya Power taking up a maximum capacity of 200 megawatts in the first three years which will rise to 400MW for the remaining period.

In the deal, Kenya is buying Ethiopian power at 6.50 US cents per kWh, which is significantly lower than the tariffs charged by independent power producers.

AfDB says the transmission line is critical to linking the Southern Africa Power Pool and Eastern Africa Power Pool to Egypt and Sudan in the North.