Re-designing feasibility studies to address private sector funding needs

The demand for energy and water in Kenya is increasing and outmatching commensurate investments. Large-scale multipurpose hydro projects require significant investment and often rely on public or multilateral-based finance. Their implementation is limited to sovereign-linked financing and implementation arrangements, which can lead to significant public finance burdens. Innovative finance options present a reasonable solution whereby the unbundling of multipurpose projects for power and other consumptive uses can attract private sector funding. This article will demonstrate how in the case of the Magwagwa scheme, Kenya, this has been applied, to arrive at a viable and bankable project with reduced capital cost requirements and the ability to attract private capital.