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State turns to Infrastructure Fund for Sh30bn energy projects
National Treasury and Economic Planning CS John Mbadi escorted to Parliament Buildings under heavy security ahead of the 2026/2027 Budget reading on June 11, 2026.
Days after freezing a tariff review that was meant to raise the money, Kenya is now banking on the recently created National Infrastructure Fund (NIF) to raise much of the Sh30.9 billion allocated in the fiscal year starting July 1 to revamp the national electricity grid and other projects.
John Mbadi, the Treasury CS, said that part of the allocation is Sh7.5 billion to upgrade the national grid and ease transmission and distribution issues that have affected supply amid a surge in connections and demand.
Treasury CS John Mbadi delivers the FY 2026/2027 Budget Highlights at Parliament Buildings, outlining the government's fiscal policy direction and priority spending areas for the coming financial year.
However, the government froze Kenya Power’s quest for a review of electricity tariffs, which dealt a blow to efforts to raise more cash for critical projects, such as upgrading the national grid.
Much of the Sh30.9 billion will be drawn from the NIF, highlighting the importance of this new fund in light of the freeze on new electricity tariffs, which were crucial in raising billions of shillings for vital energy projects.
“Most of these energy sector projects will be funded by the National Infrastructure Fund,” said Mr Mbadi last evening when presenting the budget for the financial year starting July 1.
The Sh30.9 billion will also include Sh20.2 billion for connecting homes and public institutions in rural Kenya, and Sh3.2 billion for alternative energy technologies such as geothermal, wind, and solar power.
The ageing and constrained national grid has been cited as a key hurdle in supplying reliable electricity to Kenya Power’s 10.2 million customers, which highlights the importance of revamping the system.
Kenya Power is racing to resolve the major problems of high transmission losses and an inability to handle sudden surges in demand by upgrading the grid.
However, the government froze the tariff review application submitted by Kenya Power on behalf of the energy sector in March this year, casting doubt over the funding for critical projects.
In order to ease the impact of the unreliable supply from Kenya Power, homes and businesses have been forced to opt for alternative electricity sources, mainly solar and biomass systems. The withdrawal of the tariff application signalled that the government would seek alternative funding for critical energy sector projects.
The NIF has emerged as a key source of funding for capital-intensive projects, such as those in the energy and transport sectors. The fund will enable the government to finance these projects without taking on more debt.
The fund is anchored in the Infrastructure Fund Act 2026, which was passed into law in March this year.
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