Tea agency signs $55 million deal to build small hydro dams

December 3, 2015 9:38 AM

KTDA said the excess power generated will be sold to the national grid, providing farmers with an additional revenue stream.

A view of the Bumbuna hydroelectric dam project in a file photo. REUTERS/Katrina Manson

The Kenya Tea Development Agency has signed a $55 million syndicated loan to build seven small hydro-dams to cut reliance on the national grid and trim factory costs, the KTDA said on Thursday.

The agency accounts for about 60 percent of tea output in Kenya, the world's leading exporter of black tea - a major foreign exchange earner for East Africa's biggest economy.

The loan was arranged by the World Bank’s private sector lending arm International Finance Corporation (IFC), the Global Agriculture and Food Security Program, as well as French and Dutch development banks Proparco and FMO.

KTDA chief executive Lerionka Tiampati said construction of three hydropower projects were at an advanced stage and with the new funding construction will commence on four more small hydro power stations in 2016.

"The funding is in line with KTDA's long-term strategy to ensure that tea factories have access to alternative renewable forms of energy that will reduce operational costs in factories," KTDA added in a statement.

Kenya experienced drought early this year which affected the output of tea, while processing factories received fewer deliveries. Tea production in Kenya is expected to improve in the last quarter of the year due to enhanced rains in most key growing areas.