How World Bank helps KPLC to offer a PAYG-finance for grid-connection

KPLC reduces the connection costs for households from on averga $1,000 (Sh100,000) to  Sh15,000 – to be paid in installments. Quite similar solution to what solar companies offer with a PAYG-payment scheme. Of course, there is a significant difference: with PAYG solutions for solar systems, households subsequently have free and reliable electricity; with KPLC, there is a permanent dependency even after paying off the loan: high costs for unreliably available electricity.

Here is how the World Bank supports KPLC in its PAYG offering, which continues to be expensive for households: According World Bank, “initially KPLC shouldered this gap with commercial loans, but this imposed an increasing burden on the utility’s finances. To ensure sustainability, a two-pronged approach was implemented; first in 2015, a World Bank guarantee supported KPLC to restructure $500 million (Sh50 billion) of short-term, expensive commercial debt into a long-term maturity loan and second, a concessional debt by the donors to the government of Kenya is being on-granted to KPLC for electrification purposes, thereby keeping the debt off KPLC’s books.”

Source: EnergySiren



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