Kenya Power and Lighting Company (KPLC) is set to restructure its debt as they will be able to get access to long-term commercial financing. This follows a series of agreements that were signed by the World Bank, Government of Kenya, (KPLC) and Standard Chartered Bank of London.
This unique facility of restructuring debt is inclusive of the new commercial financing of $500 million that will assist in refinancing the existing debts of KPLC with an added advantage of long tenor long and lower interest rates.
The World Bank acted as a guarantor by contributing $200 million of International Development Association (IDA) funds as a guarantee to the commercial lenders in efforts to facilitate the new commercial loan to KPLC.
From the restricting facility KPLC’s financial position will be strengthened by saving an approximate of $180 million as a result hence this can help them to distribute electricity to areas where there is no power.
This comes when KPLC have a five year plan of investing billion dollars in distribution and transmission network to enhance reliability and make their service delivery affordable for both the existing and new customers
“With increased household connections, more children can do homework under electric light, businesses can run at night, and neighborhoods are more secure.” Said Diarietou Gaye, World Bank Country Director for Kenya.
“We believe that this Guarantee will help accelerate connections especially to rural and urban poor households.” Gaye added.
“We are very happy with this facility. We will ensure that the funds are deployed efficiently to not only upgrade our aging network but to also enhance connectivity as we race toward attaining universal access,” said Dr. Ben Chumo, Managing Director and CEO at KPLC.
“Given the long term nature of these infrastructure investments, it is important for KPLC to implement long- term financial planning and optimize its funding sources, including access to commercial financing at lower cost. Leveraging IDA funds in an innovative approach, will help KPLC achieve this,” said Pankaj Gupta, Practice Manager for Guarantees at the World Bank.