Globeleq gets payment guarantee on Kenya's Menengai geothermal project

Globeleq has finalised an agreement with African Trade & Investment Development Insurance (ATIDI) for the provision of a payment guarantee to the 35 MW Menengai geothermal project in Kenya’s Nakuru County

The facility — issued via ATIDI’s Regional Liquidity Support Facility (RLSF) — covers the risk of non-payment by the Geothermal Development Corporation (GDC) and Kenya Power and Lighting Company (KPLC).

With the guarantee in place, the project and its lenders – the African Development Bank (AfDB), the Eastern and Southern African Development Bank (TDB), and the Finish Fund for Industrial Cooperation (Finnfund) – get enhanced payment security ahead of the project’s scheduled commercial operations date.

“Signing the RLSF agreement is a major milestone for our Menengai project, significantly enhancing the project’s risk allocation,” said Edouard Wenseleers, managing director, business development and head of East Africa at Globeleq.

Once operational, the Menengai project will deliver clean and affordable baseload power to the national grid supply and significantly contribute to the Kenyan government’s goal of a clean energy mix by 2030.

Wenseleers called it an honour for Globeleq to contribute to the issuance of Kenya’s first RLSF policy in Kenya through the Menengai project.

“We hope this will pave the way for more renewable energy IPPs to benefit from this innovative instrument in the country.”

To date, ATIDI’s RLSF has supported nine renewable energy projects across four African countries, enabling 181.95 MW in new renewable energy capacity and mobilising US$324mn in total financing.

“Whilst we have supported several projects in the region, this marks the first RLSF policy issued in Kenya, as well as the first in support of a geothermal project,” said Obbie Banda, senior underwriter and RLSF coordinator.

“This milestone confirms the bankability of the RLSF product for a leading project developer and for the DFI lenders involved in this project — it also demonstrates our commitment to moving from concept to execution of our innovative instruments."

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