NAIROBI (Reuters) - The World Bank has approved a $330 million loan for Kenya to expand its national grid and support its emerging geothermal power generation.
East Africa's largest economy relies on hydropower to generate about 65 percent of its electricity but it is prone to power shortages and cuts, which were exacerbated last year when a drought dangerously lowered the nation's dam water levels.
"The supply deficit and costly short-term interventions constrain economic growth and reduce the regional competitiveness of Kenya's private sector," the World Bank said in a statement.
"The gap between electricity supply and demand has increased in recent years due to Kenya's strong economic growth and inadequate investment in power infrastructure," it said.
The multi-million dollar loan is a part of $1.4 billion being invested in the electricity sector by the government, the World Bank and other development partners, the World Bank said.
In the statement released on May 27, the Washington-based body said the lack of reliable energy lowers the annual sales revenues of Kenyan firms by about 7 percent and reduces Kenya's growth rate by about 1.5 percent annually. It was citing the 2008 Africa Infrastructure Country Diagnostic report.
