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Summary of proposed guarantee

Summaries of proposed guarantees are provided prior to Board consideration and before final contract signing, and they are therefore subject to change. Project briefs are disclosed after Board consideration and contract signing and reflect the terms of the project at the time of contract signature. Environmental and Social Review Summaries are provided for projects assigned an Environmental Assessment Category of A or B.

 

Project name
OrPower 4, Inc.
Project ID
3658
Fiscal year
2011
Status
Active
Guarantee holder
Ormat Holding Corporation
Investor country
Cayman Islands
Host country
Kenya
Environmental category
B
Sector
Power
Date SPG disclosed
August 03, 2011
Project Board date
September 08, 2011
Gross exposure
 $153.0 million
Project type
Non-SIP
Strategic priority area
IDA
Complex Infrastructure
ESRS
Environmental and Social Review Summary for OrPower 4, Inc.

This summary covers an investment by Ormat Holding Corporation of the Cayman Islands in OrPower 4, Inc. in Kenya. The investor has applied for a MIGA guarantee of $153 million for a period of up to 15 years against the risks of transfer restriction, expropriation, and war and civil disturbance. MIGA’s proposed support is for the third phase or Plant 2 of an existing project covered by MIGA.

This proposed new investment involves the expansion of a base-load geothermal power plant in the Olkaria geothermal fields of the Rift Valley, 90 kilometers northwest of Nairobi. The expansion will add capacity of 36 megawatts (Phase 3). Once completed, the project will have a combined generation capacity of 84 megawatts. Electricity generated by the plant is sold under a 20-year power purchase agreement with the national power transmission and distribution utility—the Kenya Power & Lighting Company Limited.

Environmental Categorization

The project is a category B under MIGA’s Policy on Social and Environmental Sustainability. Click here to view the Environmental and Social Review Summary.

Development Impact

The project is helping alleviate the severe power shortages that have hampered economic growth in Kenya. The World Bank Group’s Country Partnership Strategy notes that investment in electricity is a key element of unlocking Kenya’s growth potential. It also commits to strengthening the Bank Group’s support for government efforts to diversify electricity generation away from hydroelectricity to other green sources such as geothermal. The government’s recently announced National Electricity Supply Master Plan has ambitious plans to identify new generation and supply sources with the goal of tripling the national electricity supply of dependable energy to 3,000 megawatts by 2018 (and improving access from 29 percent to 40 percent by 2020), with emphasis on the development of alternative power sources—especially geothermal.

This proposed project is also aligned with MIGA’s strategic priorities of supporting investments in complex infrastructure projects as well as investments into countries eligible for assistance from the International Development Association.

 
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