Kenya’s $311m Power Lines Gamble: PPPs, Grid Risk and the Search for Space on a Crowded Balance Sheet

Kenya has just placed a big bet on keeping the lights on – without blowing up its public balance sheet.

On Monday, the finance ministry signed a $311 million agreement with Africa50, the Morocco-based pan-African infrastructure fund, and PowerGrid Corporation of India to design, finance, build and operate two new high-voltage electricity transmission lines and associated substations.

The deal will be structured as a public-private partnership (PPP). A project company led by Africa50 and PowerGrid will take on the full lifecycle – from construction to operation – under a concession of about 30 years, before handing the assets back.

For Kenya, it is a first: its inaugural PPP-funded transmission lines, rather than another state-financed project or sovereign-backed EPC contract.

For investors and system planners, it is something more: a test case for how far Kenya can stretch PPPs and securitised revenue streams to expand its grid in a world of high public debt and tight fiscal space.

The lines that will carry the next decade

The new PPP will deliver two major lines in western Kenya:

• A 400kV Lessos–Loosuk line; and

• A 220kV Kisumu–Kibos–Kakamega–Musaga line.

Together, they will add just over 200km of high-voltage transmission capacity, easing one of the most stressed parts of the national grid.

The Kenya Electricity Transmission Company (KETRACO) – the state-owned grid operator – will act as the contracting authority. But unlike past projects where KETRACO borrowed heavily and then awarded EPC contracts, here it is buying capacity and service from a private concessionaire.

The finance ministry and Africa50 say the project will:

• Improve system stability;

• Reduce technical losses and load shedding; and

• Help integrate more renewable power from geothermal, wind and hydro sources.

That is not marketing spin. Kenya’s grid has repeatedly buckled under demand-driven overloads, with nationwide blackouts blamed on transmission corridors running too hot for too long. Peak demand hit a record 2,439 MW in December 2025, pushing ageing infrastructure to its limits.

KETRACO’s long-term plan calls for 5,700km of new lines to expand the network to nearly 9,600km over the next two decades. The Africa50/PowerGrid concession will only build a sliver of that – but it is meant to prove that private capital can be harnessed at scale.

Construction is expected to begin in 2026, once detailed design, land acquisition and financial close are complete.

Why PPPs, why now?

The answer lies in Kenya’s balance sheet.

Years of heavy borrowing for roads, rail and power have left Nairobi with one of Africa’s highest debt-service-to-revenue ratios, and limited space to take on more conventional loans.

At the same time:

• Electricity demand is rising with urbanisation, industrialisation and new data-centre and EV plans;

• The country wants to move more off diesel and onto cleaner grid power;

• Traditional sources of cheap finance – budget aid, concessional loans – are under pressure globally.

President William Ruto’s response has been to push hard into public-private partnerships and securitisation of future cashflows, from highways to power infrastructure:

• A $1.5bn toll-road PPP on the Mombasa–Nairobi–Western corridor with Chinese contractors and Kenya’s own NSSF as an equity investor;

• Cabinet approval for a new National Infrastructure Fund and sovereign wealth vehicle, seeded partly by selling down stakes in Safaricom and Kenya Pipeline;

• And now, the $311m grid PPP with Africa50 and PowerGrid.

The logic is simple:

If the state cannot keep borrowing on its own balance sheet, bring in private partners to finance, build and operate assets, and pay them back over time from user charges or availability payments.

Critics worry that this simply shifts liabilities off-balance-sheet, via opaque long-term contracts that future governments and consumers will struggle to unwind. They also point to a previous attempt to award a transmission PPP to India’s Adani Group, which was scrapped after the founder was indicted in the United States.

The Africa50/PowerGrid deal is therefore being watched closely for its contract quality, transparency and risk allocation as much as for the steel it will put in the ground.

Africa50, PowerGrid and the new model of “specialist PPPs”

For Africa50, this project is squarely in its sweet spot.

The AfDB-sponsored platform, majority-owned by African states, is designed precisely to crowd private capital into infrastructure where commercial investors fear early-stage risk. PowerGrid, for its part, brings decades of experience building and running India’s vast transmission network – including PPP-style concessions and loss-reduction programmes.

Together, they are offering Kenya something it has long lacked in the grid space:

• Technical depth on high-voltage design, operations and loss management;

• A familiar PPP template that has been used elsewhere;

• A structure where some construction and operational risk sits with the private partners, not just KETRACO and taxpayers.

If it works, the model could be replicated across the 5,700km pipeline of lines KETRACO wants to build – and, more broadly, across the continent’s power-transmission gap.

If it fails, it will reinforce the sceptics’ view that PPPs in complex infrastructure are too slow, too opaque and too riskyto rely on at scale.

What this means for Kenyan and African institutions

For global infrastructure funds, the $311m PPP is a benchmark.

For Kenyan banks, pension funds and insurers, it is the shape of things to come:

• Banks may provide local-currency debt, guarantees or working-capital lines to the project company and its contractors.

• Pensions and insurers could end up holding units in infrastructure funds or securities backed by PPP revenues, in addition to existing holdings of KETRACO and Kenya sovereign paper.

• Local capital markets may eventually see project bonds or securitisations linked to grid-tariff cashflows.

Layer that on top of:

• Large exposures to Kenya government bonds;

• Growing allocations to other PPPs (roads, logistics, renewables);

• And cross-border positions across East Africa…

…and the question becomes less “Is this a good project?” and more:

How does this PPP change our overall exposure to Kenya’s power system, sovereign risk and long-dated infrastructure cashflows?

Answering that requires more than a project finance term sheet. It requires system-wide visibility.

Where Verī Platform fits: seeing the grid, not just the deal

This is exactly the kind of environment Verī Platform is designed for – operating quietly in the background of banks, asset managers, pension funds, insurers and utilities, not in front of retail investors.

In a world of PPP-driven infrastructure, Verī can help Kenyan and regional institutions to:

• Aggregate all Kenya power-sector exposure – KETRACO and Kenya Power bonds, sovereign debt, infrastructure funds, PPP vehicles, project loans – into a single, look-through view at portfolio, client and institution level.

• Tag and monitor country, sector and counterparty risk – so boards can see how much depends on the same underlying assets (transmission lines, generation plants, tariff regimes).

• Integrate local and global holdings – Kenyan grid projects, regional power-pool assets and global infrastructure funds – to understand diversification rather than assume it.

• Run what-if scenarios: how a tariff shock, currency move or construction delay on one PPP would ripple through bank books, pension portfolios and insurer guarantees.

• Produce regulator-friendly reporting for the CBK, Capital Markets Authority and Retirement Benefits Authority, who increasingly want clear sight of long-dated infrastructure and PPP risk in the system.

Verī doesn’t decide whether Kenya should use PPPs or how much grid risk a pension fund should hold.

It provides the plumbing and x-ray so that when deals like the $311m transmission concession are signed, every institution can see, in real time, where that risk sits and how it interacts with everything else on the balance sheet.

Kenya’s latest power-lines deal is more than a line item in the development budget.

It is a signal that:

• The era of easy sovereign borrowing is over;

• The next generation of infrastructure will be financed through hybrid public-private structures;

• And success will depend as much on data, risk systems and transparency as on concrete and steel.

Whether this PPP becomes a model or a warning will be decided over the next 30 years.

But one thing is already clear: in a grid where every extra megawatt must be moved safely, and a balance sheet where every extra shilling of debt is scrutinised, the ability to see the whole network of risk – not just one project at a time – will matter more than ever.

---

#Kenya #Africa50 #PowerGrid #energytransition #infrastructure #PPPs #powergrid #africafinance #pensionfunds #KenyaPower #KETRACO #VeriPlatform

---

We are delighted to work together in promoting the beauty and opportunities of Mauritius.

Our websites, Mauritius Life, Veri Global, and Property Finder, are committed to providing valuable information, resources, and services related to Mauritius, its culture, economy, real estate, and more.

Please explore our websites to discover the rich cultural heritage, breathtaking beaches, thriving economy, top-notch real estate listings, investment administration, and knowledge that Mauritius has to offer. Together, we aim to showcase the best of Mauritius and assist you in making informed decisions about living, investing, and experiencing all that this beautiful island has to offer.