Nairobi — The government will link investors in the energy sector with the World Bank and the International Monetary Fund for funding.
Finance minister Uhuru Kenyatta said Treasury was keen on reigning in public debt and would not give the investors any guarantees on funding, a position that contradicts a cabinet approval of financial backing for firms involved in electricity generation.
He said the government would talk to the Bretton Woods institutions to facilitate securing alternative credit risk underwriting.
“We have established an inter-ministerial committee with World Bank and IFC participation to assist investors secure available alternative risk mitigation products,” he said.
It is the first time that Treasury has publicly stated its refusal to extend sovereign guarantees to developers in the power sector, after it emerged last month that the Ministry of Finance was not comfortable with the cabinet position announced in mid September. The reversal in policy is likely to dent Kenya’s capacity to generate power to meet the rising demand.
Mr Kenyatta told private investors they will have to turn to risk underwriters as Treasury was keen on reigning in public debt. “As a government, we have to ensure that we maintain macro-economic stability and also our public debt at a sustainable level,” he said, adding; “It is imperative for players in the energy infrastructure to think beyond conventional approaches to raising finances.”
Kenya’s rising demand for energy is linked to growing economic activity, with annual power consumption expected to hit 1,620 megawatts (MW) by 2012 from the current peak demand of 1072 MW.
Source: businessdailyafrica.com/ Image: ibtimes.com