China Eximbank provides RMB 867.2 million government concessional loan for 54.66 MW Garissa Solar Power Plant Construction Project

Project narrative

On August 31, 2015, China Eximbank and the Government of Kenya signed a government concessional loan (GCL) agreement [CHINA EXIMBANK GCL No. 2015 (10)] worth RMB 867,293,233.33 ($135,784,014) for the Garissa Solar Power Plant Construction Project. The GCL carries the following borrowing terms: a 2% interest rate, a 7-year grace period, and a 20-year maturity. It was originally scheduled for repayment in 26, semi-annual installments between August 20, 2022 and September 21, 2035. The loan was collateralized against the revenues (power purchase sales) of the project's end-user -- Kenya Rural Electrification Authority, which was later reconstituted as the Rural Electrification and Renewable Energy Corporation (REREC) -- and the borrower was expected to maintain a minimum cash balance in a non-interest-bearing escrow account (at Kenya Commercial Bank). The account balance was $17,721,464.69 (KES 2,490,282,243) as of July 1, 2023 and $17,721,457.20 (KES 2,295,407,187) was of June 30, 2024. The loan had achieved a disbursement rate of 93.47% ($126,922,733 out of $135,784,014) and there was an undrawn balance of $8,861,281 (worth 6.52% of the face value of the loan) as of June 30, 2021. The borrower made principal repayments worth RMB 47,502,088.34 between July 1, 2020 and June 30, 2021 (Fiscal Year 2020-2021) and no principal repayments between July 1, 2021 and June 30, 2022 (Fiscal Year 2021-2022). The loan’s amount outstanding was RMB 818,856,345.01 as of June 30, 2020, RMB 866,358,433.35 as of June 30, 2021, and RMB 866,358,433.35 as of June 30, 2022. The purpose of the $151,047,789.51 project was to construct a solar power plant that is located 20 kilometers north of Garissa, in Barki Village. The power plant was originally planned to have a capacity of 50 MW, providing electricity for 350,000 people and 1000 employment opportunities for citizens in the area. Jiangxi Corporation for International Economic and Technical Cooperation (CJIC) was the general contractor responsible for project implementation, but it undertook the project in collaboration with Kenya's Rural Electrification Authority (REA) and the Chinese solar company JinkoSolar. Project implementation commenced on September 29, 2016. Kenyan President Uhuru Kenyatta officially launched the power plant on December 13, 2019. When solar panel prices went down, the capacity of the plant was increased from 50MW to 54.66MW. Of the power produced by the plant, Garissa town consumes roughly 5MW and the rest is connected to the national grid, making it the biggest solar plant in East Africa. The plant sits on 85 acres and consists of 210,000 photovoltaic (PV) panels. The power plant is now operated by Kenya's Rural Electrification Authority (REA) and it sells power to Kenya Power and Lighting Company (KPLC).