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Volkswagen’s MAN Agrees to Build Kenya Diesel, Steam Power Plant

June 20 (Bloomberg) -- A unit of Volkswagen AG-controlled MAN SE has won a contract to build a diesel- and steam-driven power station in Kenya with a capacity of almost 95 megawatts.

MAN Diesel & Turbo is building the plant in Thika, about 41 kilometers (25 miles) northeast of Nairobi, at a cost of “tens of millions of euros,” the Munich-based company said today in a statement on its website. The turnkey project is for Thika Power Ltd., a unit of Lebanon’s Matelec Group, while power will be supplied to Kenya Power Ltd. for the national grid from 2013.

Diesel engines will be able to generate 88 megawatts and waste heat from the machines will power a steam turbine to produce a further 6.8 megwatts, MAN Diesel said. “The African continent offers huge potential for our power plants,” Chief Executive Officer Rene Umlauft said in the statement.

The International Finance Corp. is investing 3 billion shillings ($36 million) in Thika Power as part of Kenya’s plan to lure private investment to the industry and reduce reliance on weather-dependent hydroelectricity, it said on June 8.

Power shortages have hurt growth in East Africa’s largest economy by an estimated 2 percent annually, according to the IFC, the Washington-based World Bank’s private lending arm.

The gap in funding for African infrastructure projects is $35 billion annually, with the region’s energy industry facing the biggest shortfalls, according to the World Bank.

To contact the reporter on this story: Sarah McGregor in Nairobi at smcgregor5@bloomberg.net

To contact the editor responsible for this story: Andrew J. Barden at barden@bloomberg.net

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