Prior to the introduction of independent power projects (IPP), Kenya relied primarily on concessionary funding from multilateral and bilateral agencies to finance new power investments. In the 1990s, however, the global donor trend shifted toward private participation in infrastructure with concessionary funding being targeted at health and social services. This move away from development finance for power projects was aggravated by a general aid embargo, imposed on Kenya throughout the early and mid-1990s, for reasons linked to corruption and lack of advancement in the creation of a multi-party state, which affected all sectors, including power. Thus, a platform of reform for opening up the country's generation sector to private participation gradually emerged in the mid-1990s, paving the way for contracting the first set of IPPs in 1996.
This paper was prepared by Management Programme in Infrastructure Reform & Regulation at the University of Cape Town Graduate School of Business Breakwater Campus, Cape Town, RSA.