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Kenya signs power line deal worth $311 million with Africa Fund, Indian company

Kenya signed a $311 million agreement on Monday with PowerGrid Corporation?of India and a pan-African Infrastructure Fund for the construction of high-voltage transmission lines.

In order to fund infrastructure projects, the East African nation has turned to public-private partnership and securitisation. This is due to high public debts and a tight fiscal environment.

According to the Ministry, under the power line deal, Africa50, an infrastructure fund based in Morocco that is owned primarily by African countries, will work with PowerGrid on the design, financing, construction and operation of?the transmissions lines and sub-stations.

Africa50 announced that the project company would "undertake the complete lifecycle?of the transmission network, from construction through to operation -- over a 30-year period of concession".

It said that the two lines "would unlock cleaner, more affordable and reliable power for millions Kenyans."

It was unclear how much money would be invested and what the increase in transmission capacity would look like.

Kenya Electricity Transmission Company Limited, a state-owned firm, is the contracting party.

According to the Finance Ministry, the project will "enhance the system stability, reduce load-shedding and technical losses, and facilitate renewable energy integration."

In the past, high demand-driven 'overloads' were blamed for tripling up the grid and causing nationwide blackouts. The government is trying to 'address this by expanding infrastructure in order to accommodate increased demand without straining network.

The debt burden of 'Kenya and the resistance to tax increases have closed off traditional financing sources for such infrastructure. President William Ruto responded by negotiating with the private sector.

Critics claim that the strategy exposes state liabilities to increased liability through opaque "contracts". The government has dismissed the criticism.

Last year, Ruto's attempt to build new transmission lines with India’s Adani Group fell through after the founder of Adani was indicted by the United States. Duncan Miriri, Aiden Lewis and Duncan Miriri contributed to this report.

(source: Reuters)