Kenyan Independent Power Producer, Sosian Energy, has finalized an agreement to receive a $68 million credit investment from the Development Bank of Southern Africa (DBSA). This funding, equivalent to approximately Ksh. 8.857 billion, aims to enhance the IPP’s operations.
Sosian Energy plans to use the funds to increase its current output of 35 megawatts at its geothermal plant, which commenced operations in November 2023.
Additionally, according to Kigen Moi, a director at Sosian Energy, the investment will be utilized to settle payments owed to contractors who financed the initial construction phase of the power plant.
“We are looking to be able to invest this in future projects and also to be able to expand the future geothermal fields where we will be able to bring cheap electricity to more Kenyans and Africa at large once we are able to connect our individual countries’ energy pools,” Kigen said.
He insisted on the need to bridge the energy gap in the country.
“The only way to do that is to have dynamic team members such as the DBSA, to support privateers like us , who are actually Africans. Because in a lot of these conferences which I am sure you have all been to, all the chatter all the talk is with foreign main lenders supporting foreign IPPs on the continent but we have a very unique situation here today might I say even historic ..this deal in itself is an epitome of pan Africanism , because we are the first African owned company that is being financed by an entirely African owned development bank,” Kigen added.
He also termed Sosian energy hydrogen plant as one of the cheapest suppliers of energy to the Kenyan grid even as he called on the government to further facilitate more local IPPs to produce more.
“At Sossian we are already producing electricity at at the cheapest rate in Kenya’s history at south of 7 cents were even cheaper than government in terms of supplying electricity so we look forward to be able to be supported in our funding effort so that we can continue to provide electricity at a cheap rate to the people who need it the most,” he added.
DBSA emphasized that the continent will increasingly need local energy solutions, highlighting geothermal energy as a largely untapped market in Kenya, where over 10 gigawatts remain unexplored.
Mohan Vivekanandan, the Group Executive for Origination and Coverage at the Development Bank of Southern Africa, pointed out that project financing continues to be a significant obstacle for many African companies.
“The total project cost for Sosian is roughly Ksh.12.1 billion and the DBSA will be providing Ksh.8.857 billion over a 12 year repayment period to support the transaction,” Mohan explained.
Sosian becomes the first indigenous IPP to be financed by an African multilateral lender. DBSA further says it is exploring other investments in Kenya’s affordable housing sector as well as port and road transactions.
