Kenya to Build Africa's First Private Electricity Grid With Indian Investment

Kenya is currently facing a significant infrastructure financing deficit. As the government can't meet investment needs in the sector, the country is developing programs aimed at enhancing private sector participation.

Kenya plans to construct two privately-owned electricity transmission lines covering 237 kilometers, expected to be first of its kind on the continent.

The project under a public-private partnership (PPP) framework is being developed by pan-African infrastructure investment platform Africa50 and Power Grid Corporation of India Limited (POWERGRID). According to local media reports, the project will cost KSh37.65 billion ($300 million).

Kenya's treasury outlined the implementation of this initiative in its 2023 budget policy statement.

"The government of Kenya in partnership with Africa50 through a PPP framework intends to pilot transmission line PPPs by way of the financing, design, construction, operation and maintenance of the 400KV, 165km - Loosuk – Lessos Transmission Line and the 220KV, 72km – Kisumu-Musaga Transmission Line," the statement read.

Loosuk is located in Samburu county, Lessos in Nandi county, and Musaga is in Kakamega county, mainly in the western part of Kenya. The project is expected to improve both the supply and reliability of power transmission in this region. Apart from transmission lines, it will also incorporate associated infrastructure, including electricity substations.

As stated on the official website of the platform, Africa50 will act as a facilitator in the partnership between the Kenyan government and private investors, as well as provide project development and finance expertise. At the same time, POWERGRID, an electric transmission utility company, will assist in terms of "technical and operational know-how."

Expected positive effects from the construction of the transmission lines include the creation of direct and indirect job opportunities. Moreover, according to Africa50, during the project’s construction and operation phases, technical skills from POWERGRID will be transferred to locals and the state-owned Kenya Electricity Transmission Company. The latter is currently the only firm in the country responsible for building, maintaining and operating high-voltage transmission infrastructure.

The partners also noted that the construction will create a demonstration effect across the continent and facilitate the expansion of its power transmission networks, which, in turn, is critical to bridging Africa's electricity access gap.

The project comes at a time when Kenya is trying to increase the share of the private sector in its economy, in particular, to enable private investors to undertake expensive infrastructure projects. This move has been caused by an infrastructure financing deficit. According to the World Bank, the deficit, estimated at $2.1 billion annually, hinders Kenya's growth and development.

Other key sectors, in which the government is seeking to cooperate with the private sector through the PPP framework include water, housing, roads, trade and industry.