Kenya KPLC Refinancing
Kenya Power & Lighting Company (KPLC) is a key provider and operator in Kenya’s electricity sector. It is the single buyer of all electricity produced and the sole distributor to end users. As such, it is responsible for maintaining and operating the distribution network and certain parts of the transmission network.
KPLC is the first electric power transmission and distribution utility in Sub-Saharan Africa to successfully undergo financial restructuring. The utility had accumulated debt to the point wherecomplying with financial obligations and implementing its capital expenditure program was under threat.
In June 2016, KPLC restructured $500 million of its existing commercial debt into new, longer-term commercial loans. The restructuring was enabled by a partial International Development Association (IDA) loan guarantee to the commercial lenders. The result was a major improvement in KPLC’s financial position. This helped KPLC implement its investment program, including important rural electrification investments while maintaining its financial viability.
PROJECT HIGHLIGHTS
KPLC faced an unsustainable financial situation, in part because of an ambitious electrification program. A limited ability to secure long-term concessional loans compounded matters.
To help KPLC improve its financial sustainability, a comprehensive support package was put together with the World Bank. It consists of (i) $250 million of IDA credit and (ii) $200 million of IDA guarantee, which mobilized $500 million of commercial finance.
The IDA guarantee supports KPLC debt restructuring.
IDA support helped KPLC continue its work towards expanding access to electricity while avoiding the erosion of its balance sheet.