Chase Bank is set to receive Sh3 Billion from french fund AFD for lending to environment friendly energy projects.
The mid-sized lender is targeting investors in renewable energy projects such as small hydro, biomass, biogas, solar, and geothermal.
“This is a 12-year facility and will therefore address long term funding requirements of energy projects. The total committed amount is €30 million (Sh3.4 billion), of which €10 million (Sh1.1 billion) will be available immediately for lending,” said the bank’s chief executive Paul Njaga.
AFD will provide technical assistance that will be managed by the Kenya Association of Manufacturers (KAM) to help the bank improve its knowledge on lending to sustainable energy projects.
Several manufacturing and agricultural firms have been setting up their own electricity plants in a bid to avoid losses attributable to power outages and to control their total costs.
Agricultural firm Rea Vipingo, for instance, has announced plans to set up a 48-megawatt power plant in Kilifi County.
Tea firms in Mount Kenya region such as Imenti Tea Factory are setting up small hydro power plants to cut electricity expense which is a major cost element.
Notably, Carlo Van Wageningen, chairman of Lake Turkana Wind Power project, is a major shareholder at Chase Bank with a 6.5 per cent stake.
The wind project is estimated to bring 310 megawatt to the grid on completion and is expected to contract several medium sized companies during the life of the project.
The French group AFD owns investment firm Proparco, which has also loaned Chase Bank Sh4 billion for seven years.
Chase Bank, which has been recognised as one of the fastest growing lenders in the country, has been relying on long term credit from development finance institutions and capital injection from shareholders to fund the growth.
The bank last week received Sh5 billion from African Development Bank for lending to small and medium sized enterprises, mainly those owned by youths. Some of the development partners have converted their debt to equity.