Gulf Power will be expected to add an additional 80MW to the national grid upon completion of the project next year.
Part of the World Bank funds will serve as partial risk guarantee for Gulf Power in case Kenya Power fails to meet its obligations as stipulated in the deal.
According to Energy Regulatory Commission, energy demand in Kenya will be expected to reach 16,905MW by 2031 from 1,520MW that was recorded in 2012.
With this project, Gulf Power has joined the four major power producers of Kenya, namely Thika Power, Triumph Power, Orpower 4, and Lake Turkana Wind Power, in an endeavour to increase electricity supply in the country.
World Bank director for Kenya Johannes Zutt said that the signing for a third private power producer would increase supply of electricity in Kenya.
The total cost of the project currently stands at US$108mn. Its construction work was launched in July last year.
The International Finance Corporation has invested $31mn in the operations of Gulf Power. The company has also received loans from OPEC Fund for International Development.
Finance minister Njeru Githae has said that the energy sector has played a critical role in driving the nation’s development agenda as envisaged in Vision 2030.