March 9, 2016 / 2:55 PM / a year ago

Kenya signs $408 mln loan with Japan for 140 MW geothermal plant

NAIROBI, March 9 (Reuters) - Kenya and Japan on Wednesday signed a 46 billion yen ($408 million) loan agreement to go towards building a 140 megawatt (MW) geothermal power plant that is expected to be operational within the next two years, the two governments said.

The plant, know as Olkaria V, will be built by Kenya Electricity Generating Company (KenGen), which has said it expects to begin construction in July, with the plant arriving on the grid by the end of 2018.

The plant is part of KenGen's plans to add 720 MW of electricity - most of it from geothermal sources - to the grid between this year and 2020, at a cost of just over $2 billion.

"The credit we have received today will fund the construction of a power generation plant to tap on the vast geothermal steam at Olkaria Geothermal field for generation of additional 140 MW electricity to be put to the national grid," National Treasury Cabinet Secretary Henry Rotich said after signing the agreement.

The Olkaria field is in Kenya's Rift Valley.

Kenya, which depends mostly on renewable energy such as geothermal and hydro power, plans to increase it power generating capacity to about 6,700 MW by 2017, from about 2,500 MW currently. It also aims to cut electricity bills, tackling problems regularly blamed for holding back Kenyan business.

KenGen has a commitment to produce 844 MW for the grid under the plan, and says it had already added 374 MW.

Rotich said that another project - the 300 MW Lake Turkana Wind Power - was expected to add 90 MW to the grid by the end of this year, and another 200 MW by the end of next year.

$1 = 112.7700 yen Reporting by George Obulutsa; Editing by Edith Honan and Mark Potter

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