As Kenya’s investment climate continues to boom, two Asian countries appear to be competing for Kenya’s favor ‒ China and Japan.
China’s Export-Import (Ex-Im) bank has announced that it will provide Kenya with a Sh7.5-billion loan on concessional terms to fund the drilling of production wells at a planned 140 MW geothermal plant in the Rift Valley.
Kenya also recently announced a Sh23.4-billion loan from Japan to aid in the construction of two new units at the Olkaria I geothermal plant.
The East African country aims to generate at least 500 MW of geothermal energy by 2030. Kenya is projected to contain 7 GW of geothermal capacity with 163 MW of grid-connected geothermal power currently online. The Kenyans will put the Chinese loan to use through the drilling of 26 production wells to support the 140-MW Olkaria IV project. Energy Minister Kiraitu Murungi estimates the costs to be around $714 million, according to local media reports.
Reports also claim that the Ministry is seeking to acquire drilling rigs in order to drill an additional 60 wells.
At the 3rd Comesa Investment Forum, held in Sharm el Sheikh, Egypt from April 12-13, Vice Governor of the China Development Bank was enthusiastic about relationships between African countries and China. And just five months prior in early November, Chinese Premier Wen Jiabao and heads of state from 49 African countries made the decision to adopt a three-year action plan of Sino-African cooperation. The Premier said, “China’s involvement in Africa is sincere with no strings attached – it isn’t political.”
China has been criticized – mainly by Western countries and institutions – for investing in Africa solely for commercial purposes. However, China is making an effort to downplay that view and has announced it will provide $10 billion in concessional loans to African countries classified as “less developed countries,” who will receive zero-tariff rates across 95% of traded products with 60% becoming tariff-free. The Asian country also plans to train 2,000 locals in the African agricultural technology sector and more than 100 postdoctoral candidates to make sure this isn’t a short-term investment, but a long-term opportunity to propel growth in Africa. In addition, it has proposed the construction of 100 renewable energy projects for Africa including solar, hydro, biogas, and with the Kenyan investment, geothermal.
Yet Japan is continuing to make it known that it is interested in Africa as well with the recent announcement of the Asian island financing Africa’s largest PV plant, among other African investments. So the race continues to see which country – China or Japan – will eventually win the majority of African resources.
Subscribeto Alternative Energy Africa today for more in depth news in the alternative/renewable energy sector and be sure to grab yourrisk-free trialto see what we’re doing in 2010.
