KenGen of Kenya Secures JICA Loan for Geothermal-Power Plant

  • Loan helps fund plan to more than double generating capacity
  • Shares head for biggest gain in more than three months

Kenya Electricity Generating Co., the country’s biggest power producer, said it will receive a $387.2 million loan from the Japan International Cooperation Agency to fund the construction of a geothermal power plant.

The loan agreement will be signed next month, when the company plans to tender for construction of the Olkaria 5 facility, about 70 kilometers (44 miles) northwest of the capital, Nairobi, Chief Executive Officer Albert Mugo said in an e-mailed response to questions Thursday. Construction is expected to begin in the third quarter and power from the plant will be added to the national grid by 2018, it said.

KenGen, as the company is known, plans to more than double its generation capacity to 4,270 megawatts by 2025 at a cost of $8.1 billion. Finance Director John Mudany said in December the company may partner U.S., Chinese or Indian investors to help finance and develop geothermal plants. It’s planning to raise 28 billion shillings ($273.7 million) in a rights offer as part of its funding plan.

The company’s stock surged 9.1 percent, its biggest gain in more than three months, to trade at 6 shillings by 12:43 p.m. in Nairobi. At least 4.78 million shares traded on Thursday, more than eight times the three-month daily average.

“There’s a lot of interest in the shares ahead of the rights offer,” Eric Musau, a senior analyst at Standard Investment Bank in Nairobi, said by phone.

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