Japanese banks, in collaboration with the Eastern and Southern African Trade and Development Bank (TDB), have approved a loan of $14.4 million (Sh1.86 billion) for British firm Globelec. The loan will be used to finance the acquisition of power generation equipment for its upcoming 35-megawatt geothermal plant in Menengai, Nakuru County.
The Japan Bank for International Cooperation (JBIC) will contribute $8.64 million (Sh1.1 billion), while Mizuho Bank will provide $5.76 million (Sh744 million) to TDB. TDB will then lend the amount to Globeleq Menengai Geothermal Limited. Nippon Export and Investment Insurance (NEXI) will underwrite Mizuho’s portion of the loan.
Globelec initiated the construction of its $15 billion plant in June 2023, with Japanese company Toyota Tsusho Corporation and its Kenyan subsidiary CFAO Kenya Limited handling the construction. The plant is expected to be completed by mid-2025, with Fuji Electric Co. Ltd manufacturing the main machinery, including geothermal steam turbines and power generators.
The loan is part of a credit line established between JBIC and TDB in 2019 to purchase geothermal power generation equipment from Toyota Tsusho and CFAO Kenya Limited. NEXI will provide insurance for Mizuho Bank’s loan portion.
Globelec’s plant is one of three geothermal plants planned for the first phase of the Menengai Power project, aiming for a total of 105MW from three independent power producers. Sosian Menengai Geothermal Power Limited and Orpower Twenty-Two Limited are the other developers awarded contracts to set up steam power installations, with Sosian already supplying power to the national grid.
The companies involved purchase steam from the Geothermal Development Company (GDC) under a 25-year implementation and supply agreement. Globelec also has a 25-year power purchase agreement with Kenya Power.
Globelec, majority-owned by British International Investment Plc (BII), acquired a controlling stake in Quantum Power East Africa in 2021, leading to its interest in the Menengai plant. Quantum Power had initially been awarded the contract to construct the plant in 2013. Additionally, Globelec owns a 52MW solar power plant in Malindi, which started supplying energy to the grid in 2021.
Overall, the collaboration between Japanese banks, TDB, and Globelec is a significant step towards advancing geothermal energy production in Kenya and contributing to the country’s efforts to increase its renewable energy capacity.