Public-private ties right for electricity financing in Kenya

So far, there are only 5 PPP power projects in Kenya and only three have reached post procurement stage. Very few private partners have a balance sheet that would justify corporate finance for the huge capital costs of these ventures. Project Finance is therefore more appropriate for them. The government can play a part in making the projects more bankable by – coupling the generation BOTs with full offtake Power Purchase Agreements (PPAs) and where the off-taker is not creditworthy, offering guarantees for the off-taker’s obligations; offering tax concessions since taxes greatly reduce project cash flow; supporting the project in the form of subsidies, guarantees or indemnities; offering land and other logistical facilities to reduce capital costs and coordinating and expediting obtaining of approvals, permits and consents.

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