The World Bank has approved an additional US$80 million to enable Kenya to improve electricity distribution and implement electrification programs to support economic growth and reduce regional disparities.

A statement from the bank's offices in Nairobi said on Friday that the Energy Sector Recovery Project Additional Financing will enable the Kenyan government to expand its energy sector development program.

"Improving the supply and reliability of power is critical to improving private sector competitiveness and creating economic opportunities for Kenyans who are not presently connected," said Patrick Nyoike, permanent secretary in the Ministry of Energy. "It is part of our commitment under the Vision 2030 development strategy."

Currently, only 18 percent of Kenyans have electricity in their homes, with only three percent of families having electricity in the rural areas.

The additional financing will also support efforts to reduce the cost of doing business by reducing power outages, which are a major constraint to private sector growth and job creation.

The additional financing is build on an earlier 80 million-dollar project approved by the bank in July 2004. The scope of the challenges faced by the sector was underscored by the Bank's Country Director for Kenya.

"Kenya requires massive investment in the energy sector to cope with an ever-increasing demand arising from rapid economic growth since 2003," said Johannes Zutt, the Bank's Country Director for Kenya. "We are working with the government and other development partners to address energy constraints to economic recovery, poverty reduction and regional equality."

Specific areas targeted by the additional financing to enhance regional equality in electricity distribution include Western and Coast Provinces, which have the highest incidences of poverty in Kenya.

Progress to date has been encouraging, and reforms to expand electricity access to lower-income households in urban and rural areas in particular, are already underway including the reduction of charges and deferment of payment for first-time connection to the electricity grid.

The government has also encouraged greater private sector participation and strengthened regulatory oversight of the energy sector.

"The Bank is encouraged by the reforms that the government is implementing in the energy sector and will continue to support endeavors to increase electricity access especially to household and business consumers," says Paivi Koljonen, the TTL for the Project.

The Energy Sector project is being implemented in partnership with other development partners, including the French Development Agency, the European Investment Bank, and the Nordic Development Fund.

The credit is approved on standard terms of a 40-year maturity with a 10-year grace period provided by the International Development Association--the Bank's concessionary lending arm.

(Xinhua News Agency April 3, 2009)