The new project marks the first phase of a regional East Africa power integration program which is likely to cost US$1.3B at completion. The project is expected to reduce energy costs, promote sustainable and renewable power generation, better protect the region’s environment, and pave the way for more dynamic regional cooperation between the countries of East Africa.

Together with the Governments of Ethiopia and Kenya, the African Development Bank (AfDB), and the French Agence Française de Développement (AFD), the project will finance a cross-border power line, to be built according to strong social and environmental safeguards that will allow Ethiopia to sell its surplus power to Kenya and reduce the need for polluting thermal power in Kenya. The exported electricity will originate from the large number of existing and future power plants in Ethiopia. When required, the flow of electricity can be reversed and Kenya would thus use the same interconnection facilities to sell electricity to Ethiopia.

The World Bank financing to both governments – US$243M for Ethiopia and US$441M to Kenya – will come from the International Development Association, the Bank’s fund for the world’s poorest countries.

“This landmark transformational project will change the fundamentals of the power sector in East Africa. It will expand access and lower the cost of electricity supply to homes and businesses across Kenya and help to reduce thermal power emissions in Kenya, a clear benefit to the region’s environment,” said Makhtar Diop, World Bank Vice President for the Africa Region. “Currently, only one in three Africans has access to electricity in their communities so boosting power sharing between countries is an essential step toward addressing Africa’s needs.”

Ethiopia will benefit through the sale of energy to Kenya, which faces severe power shortages, and is among the five African countries considered likely to achieve middle-income status in the next decade provided it can grow at six percent annually, significantly expand its electricity supply and improve its transport links. Both countries will benefit from additional jobs created by construction and installation activities.

“The Eastern Electricity Highway Project will make a significant contribution to help meet the development needs of the people of Ethiopia, Kenya and the sub-region” said Jamal Saghir, World Bank Director for Sustainable Development, Africa Region. “Once built, this power line will be a symbol of Africa’s determination to solve its energy crisis through cooperation in energy trade. It will be a landmark in achieving more growth and less poverty in the region.”

With the continent now among the world’s fastest growing developing regions, Africa is becoming a new pole of growth in the world economy. However, high infrastructure costs, particularly in smaller African countries, are restricting the pace of Africa’s ability to sustain its high growth rates. The project takes a regional approach to infrastructure development to lower cost of power supply by giving Kenya access to more efficient power technologies and Ethiopia’s larger scale of production.

The banks approval of the East Africa electricity highway project is anchored in a regional strategy for Africa which promotes greater investment in the continent’s dire lack of key infrastructure as a key step to creating significantly more economic growth and less poverty, with a special emphasis on lowering the cost of supply to create jobs and stimulate the investment capacity of the private sector.

“The Eastern Electricity Highway Project is a unique opportunity to unlock East Africa’s vast energy potential, including hydropower, while safeguarding the environment,” said Paivi Koljonen, a Lead Energy Specialist in the Bank’s Africa Region and Team Leader for the new power sharing project. “We look forward to the project coming on stream so that the idea of power sharing becomes a reality, and helps to create better development prospects for communities in all East African countries.”