Relationship to CPF The proposed project is aligned with the Country Partnership Strategy (CPS - FY14-18), whose overarching goal is sustainable reduction in poverty and increased shared prosperity. Aligned both with Kenya’s Vision 2030 and its Medium-Term Plan, the strategy highlights three domains of engagement: • Competitiveness and sustainability – growth to eradicate poverty; • Protection and potential – human resource development for shared prosperity; • Building consistency and equity – delivering a devolution dividend. The project will directly contribute to domain 1 by supporting an enabling environment to scale-up least cost renewable generation capacity – vital for reducing the operating costs of industries and enhancing the productive incomes of households. The proposed project also adheres to the objectives set in World Bank’s Energy Sector Directions Paper - specifically on ‘expand renewable energy’ and ‘create an enabling environment’. The World Bank is committed to supporting all forms of renewable energy depending on country’s resource endowments; policy framework; availability for financing for any cost differences etc. Geothermal – an abundant resource in East Africa, is a particularly low-cost resource with an ability to provide reliable supply. The World Bank is also dedicated to helping countries promote market solutions and increase leverage of financial resources. This support can be in the form of strengthening regulatory and contractual frameworks; enhancing the financial sustainability and creditworthiness of utilities; and using guarantees where appropriate to improve credit standing and mitigate risks for private sector. By building from the long-term experience in the development of innovative products to optimize the use of concessional resources, promote the judicious use of scarce public funds and crowd-in commercial capital across the power sector in Kenya, the proposed project supports the implementation of Maximizing Finance for Development (MFD, the “Cascade”) approach laid out in the World Bank’s Development Committee paper. The objective of the Cascade is to mobilize commercial finance, enabled by upstream reforms where necessary to address market failures and other constraints to private sector investment at the country and sector level, including the provision of guarantees and risk-sharing instruments to mitigate sectoral risks. Proposed Development Objective(s) The proposed development objective is to enhance KenGen’s ability to attract long-term private capital for the sustainable development of renewable energy. Key Results (From PCN) PDO level indicator: Amount of Private Capital Mobilized KenGen Debt Service Coverage Ratio KenGen Current Ratio Concept Description Project Components
Relationship to CPF The proposed project is aligned with the Country Partnership Strategy (CPS - FY14-18), whose overarching goal is sustainable reduction in poverty and increased shared prosperity. Aligned both with Kenya’s Vision 2030 and its Medium-Term Plan, the strategy highlights three domains of engagement: • Competitiveness and sustainability – growth to eradicate poverty; • Protection and potential – human resource development for shared prosperity; • Building consistency and equity – delivering a devolution dividend. The project will directly contribute to domain 1 by supporting an enabling environment to scale-up least cost renewable generation capacity – vital for reducing the operating costs of industries and enhancing the productive incomes of households. The proposed project also adheres to the objectives set in World Bank’s Energy Sector Directions Paper - specifically on ‘expand renewable energy’ and ‘create an enabling environment’. The World Bank is committed to supporting all forms of renewable energy depending on country’s resource endowments; policy framework; availability for financing for any cost differences etc. Geothermal – an abundant resource in East Africa, is a particularly low-cost resource with an ability to provide reliable supply. The World Bank is also dedicated to helping countries promote market solutions and increase leverage of financial resources. This support can be in the form of strengthening regulatory and contractual frameworks; enhancing the financial sustainability and creditworthiness of utilities; and using guarantees where appropriate to improve credit standing and mitigate risks for private sector. By building from the long-term experience in the development of innovative products to optimize the use of concessional resources, promote the judicious use of scarce public funds and crowd-in commercial capital across the power sector in Kenya, the proposed project supports the implementation of Maximizing Finance for Development (MFD, the “Cascade”) approach laid out in the World Bank’s Development Committee paper. The objective of the Cascade is to mobilize commercial finance, enabled by upstream reforms where necessary to address market failures and other constraints to private sector investment at the country and sector level, including the provision of guarantees and risk-sharing instruments to mitigate sectoral risks. Proposed Development Objective(s) The proposed development objective is to enhance KenGen’s ability to attract long-term private capital for the sustainable development of renewable energy. Key Results (From PCN) PDO level indicator: Amount of Private Capital Mobilized KenGen Debt Service Coverage Ratio KenGen Current Ratio Concept Description Project Components
122874-PSDS-P162422-Box405323B-PUBLIC-Disclosed-1-18-2018.docx