ERC study to mitigate power costs

Business Daily Kenya:  The Energy Regulatory Commission (ERC) will undertake a study to help government source for local financiers, among ...

Business Daily Kenya: 

Energy Regulatory Commission. Photo/File

The Energy Regulatory Commission (ERC) will undertake a study to help government source for local financiers, among them pension funds, to finance energy sector infrastructure projects.

Funded by the technical assistance facility of the Private Infrastructure Development Group (PIDG), the three-month study will cost Sh20 million. The project will be implemented by GuarantCo, which is part of PIDG.

The company was established to support development of local financial markets in low-income countries. According to ERC’s Acting Director General Pavel Robert Oimeke, the study is aimed at ensuring there is adequate, quality, cost-effective and affordable supply of energy through indigenous resources.

“One of the key challenges facing the energy sector is lack of appropriate and affordable financing option and attractive incentives to mobilise investments in energy infrastructure.

This study will help unlock potential of the sector while reducing cost for the end consumer,” said Mr Oimeke. PIDG’s GuarantCo’s Executive Director, Samuel Chasia said local currency financing involves productive recycling of savings within a country rather than increasing the country’s external debt burden.

“Private sector participation needs to be in local currency. Infrastructure project revenues are typically in local currency and it is only logical to finance using the project currency as this reduces foreign exchange risk which can be very punitive as we saw last year,” said Chasia.

Chasia said a movement from Sh90 for a dollar to Sh105 for a dollar translates to a 15 per cent jump in repayments which is often passed on to consumers.

The post ERC study to mitigate power costs appeared first on Mediamax Network Limited.

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