The European Investment Bank (EIB) has cancelled a Sh19.5 billion loan offer to a firm partly owned by Centum Investments over viability and environmental concerns raised by lobbies.
The EIB East Africa head Catherine Collin had last year said the €155 million (Sh19.5 billion) generation financing package to Akiira Geothermal Ltd “will be finalised soon.”
The Centum consortium was expected to contribute Sh11.7 billion or 30 per cent of the project’s cost of Sh39 billion while the rest would be funded through commercial loans.
The EIB Deputy Head of Division Joan Manuel Sterlin Balenciaga, however, said in communique dated October 10: “After careful consideration and due to the fact that the EIB has seen no progress on the Akiira Geothermal expansion project over the past three years, the EIB has formally decided not to pursue the appraisal of the project.”
“The project has been withdrawn from the EIB’s website and the project sponsors have been informed,” said Mr Balenciaga.
The power project is based in Akiira Valley in Naivasha and would have a capacity of 70 megawatts upon completion. Centum Investments owns a 37.5 per cent equity stake in the Akiira consortium, with the remaining 62.5 per cent owned by American firms Ram Energy, Marine Power, and Danish company Frontier Markets.
It is the first phase of the development of a 140-megawatt geothermal plant.
“The EIB has taken all the allegations extremely seriously and will make every effort to ensure that EIB’s environmental and social standards are respected throughout all of its projects,” said Mr Balenciaga.
The International Accountability Project (IAP), a human rights organisation, and its partners welcomed the decision saying the affected communities in RAPland, Suswa and Loroppil had for months raised objection to the project over environmental concerns.
“This decision is worth celebrating because ultimately, the EIB listened and acted,” John Mwebe of the International Accountability Project told the Business Daily.