The project, announced in May 2024 during President William Ruto’s visit to Washington, was expected to become one of the biggest digital infrastructure investments in East Africa. 

Microsoft and Abu Dhabi-based G42 planned to build the facility in Olkaria, near Naivasha, using geothermal power. It was also meant to host Microsoft’s first Azure cloud region in East Africa.

However, negotiations later became difficult after Microsoft and G42 asked the Kenyan government to guarantee annual payments for part of the data centre’s computing capacity. 

According to reports from Bloomberg, Kenya could not provide guarantees at the level the companies requested, and discussions on the Microsoft data centre project stalled.

The delay has now raised wider concerns about whether Kenya’s current infrastructure can support hyperscale data centres and growing artificial intelligence workloads.

At full scale, the facility was expected to require around 1 gigawatt of electricity. That is close to one-third of Kenya’s current installed power capacity, which stands between 3,000 and 3,200 megawatts.

President Ruto had earlier warned about the pressure such a facility could place on the country’s grid.

“To switch on that one data centre, we would need to shut off power for half the country.”

Kenyan officials say the project has not been abandoned. John Tanui, principal secretary at Kenya’s Ministry of Information, said discussions are still ongoing, although the structure and scale of the project is still under review.

“The scale of the data centre they wanted to do still requires some structuring,” he said, while adding that power requirements are still under discussion.

The government now wants to expand Kenya’s electricity capacity to 10,000 megawatts by 2030 as it pushes to attract more large-scale technology investments.

Officials are also considering a phased rollout, beginning with a smaller 100-megawatt facility before expanding gradually. That approach could reduce immediate stress on the national grid while allowing Kenya to continue negotiations with Microsoft and G42.

The uncertainty around the project also reveals a bigger challenge facing African countries trying to attract global cloud and AI investments. 

While demand for digital infrastructure is growing with speed, many countries still lack the power generation and transmission capacity needed to support energy-intensive facilities.

The delay could also affect the rollout of Microsoft Azure services across East Africa, including cloud tools tied to products such as OneDrive and Copilot.

Neither Microsoft nor G42 immediately responded to requests for comment on the reported Kenya data centre dispute.

In a statement posted on her LinkedIn page, Verheijen clarified that the current tariffs, following the 2024 increase in Band A tariffs, now cover about 65% of the actual cost of supplying electricity, with the government continuing to subsidise the remaining amount. 

She stressed that the government’s immediate focus is not on raising electricity tariff, but on improving power supply, reducing outages, and providing targeted support to vulnerable Nigerians.

“Today, the Federal Government spends over N200 billion per month on electricity subsidies,” Verheijen explained. However, she pointed out that much of this support disproportionately benefits the wealthiest 25% of Nigerians. 

To address this, the government is introducing a targeted subsidy system to ensure that low-income households receive the most benefits, making electricity more affordable for the majority.

A key element of the power sector reform is the Presidential Metering Initiative (PMI), which will roll out 7 million prepaid meters across the country starting this year. 

Verheijen noted that this initiative aims to end estimated billing, ensuring consumers pay for what they use, and bringing greater transparency to electricity charges. She also pointed out that the nationwide metering drive will improve revenue collection and attract the necessary investments to strengthen Nigeria’s power infrastructure.

In addition to these, the government is introducing fiscal incentives such as VAT and Customs Duty Waivers to lower the cost of alternative power sources like Compressed Natural Gas (CNG) and Liquefied Petroleum Gas (LPG), further diversifying energy options for Nigerians. 

These reforms are part of the government’s initiative to ensure that power sector changes lead to concrete improvements in the daily lives of citizens.

Verheijen reiterated that the government’s policies are designed to eliminate unfair billing practices, provide equitable subsidies, and ultimately create the conditions for stable, affordable electricity. 

The focus, she stressed, remains on delivering a more reliable power supply and laying a good foundation for sustainable energy reforms.

Southern African countries have a power supply deficit and lack the required capital to take on the risks associated with renewable energy investments.

To support the green transition and increase energy capacity from renewable sources, Swedfund and IFU are each committing $22 million, totalling $44 million in direct equity investments to support Sturdee Energy’s growth initiatives.

Sturdee Energy specializes in developing renewable energy projects across Southern Africa, aiming to support economic growth and socio-economic development through sustainable energy solutions.

As an independent power producer (IPP), Sturdee Energy’s operations include developing, owning, operating, and investing in renewable energy projects and related infrastructure. The company supplies energy to government utilities, large corporations, and industrial clients.

Sturdee Energy currently operates 31 megawatts of solar power in Namibia and Botswana and is constructing an additional 20MW of solar power in South Africa. The company is advancing a portfolio of more than 200 megawatts toward financial close across four countries.

The new wind and solar power plants will generate over 600 GWh of renewable energy annually, reducing CO2 emissions by nearly 500,000 tonnes.

Swedfund and IFU have also developed an Environmental and Social Action Plan (ESAP) to strengthen human rights and labour standards throughout the project lifecycle.

“This investment is a strategic fit for Swedfund as it contributes to climate mitigation by replacing coal power with renewable energy such as solar and wind,” said Jonas Kolijn, Swedfund’s senior investment manager.

“IFU’s investment in Sturdee Energy aligns with our ambition to support the green transition and improve living conditions in developing countries, especially in Africa. We believe Sturdee Energy is a solid company with a professional management team playing an important role in increasing renewable energy supply, which is key to sustainable economic growth,” said Thomas Hougaard, senior vice president at IFU.

“At Sturdee Energy, we believe alignment begins with a shared vision of the future, but goes beyond that to agreeing on the steps required to achieve it. With IFU and Swedfund’s investment in our company, we welcome two partners who are committed to walking this path with us. We look forward to what we can accomplish together and extend our thanks to everyone who made this transaction possible,” said Andrew Johnson and James White, executive directors of Sturdee Energy.

This call was made by Minister of Power, Mr Adebayo Adelabu, during a visit from Dr Jobson Ewalefoh, Director-General of the Infrastructure Concession Regulatory Commission (ICRC). 

Adelabu clarified that solely relying on government funding is not feasible, given the competing demands of other essential sectors. 

He stated that the government’s approach includes enlisting the support of the private sector through concessions that would allow shared control while bringing in much-needed capital and expertise. 

The ICRC, which regulates such partnerships, will be key in overseeing these private investments to ensure they align with national infrastructure goals.

Ewalefoh emphasised that private sector collaboration is important for addressing Nigeria’s long-standing electricity challenges. The Public-Private Partnership (PPP) model, he noted, is essential for boosting infrastructure performance and securing additional funds. 

Given that over 85 million Nigerians lack access to reliable grid electricity, optimising existing facilities and building new ones has become imperative to meet the nation’s growing energy needs. 

In response, the ICRC has introduced a streamlined policy framework to facilitate PPP engagements. According to Ewalefoh, this six-point policy is designed to prevent delays in project execution and minimise risks posed by ill-prepared companies. 

The commission is also ensuring that each agreement includes strict conditions that nullify contracts if private bidders fail to meet specified requirements.

Both officials note that foreign direct investment in Nigeria’s energy sector would help revamp the electricity grid and stimulate economic growth. They agreed that enabling a reliable power supply would enhance Nigeria’s economy, benefiting both businesses and households.

This partnership-driven approach is expected to attract both financial investments and also technical expertise from international players, ultimately bringing sustainable energy solutions to Nigeria.

This was said on Wednesday in Abuja by Mr. Sule Abdulaziz, the Managing Director of Transmission Company of Nigeria (TCN), who was visiting ongoing projects in the Federal Capital Territory (FCT).

According to Abdulaziz, the French Development Agency (AFD), a donor organization, is providing funding for the TCN project known as the Abuja Feeding Scheme.

When finished, he claimed, it would add 1. 465 more transmission lines to the grid, improving and strengthening the FCT’s access to electricity..

“With the additional lines, TCN capacity of transmission lines will be higher than what is in existence and this means that in future, we can build some sub-stations without upgrading the lines,” he said.

He said the project will add five transmission substations, 143 kilometers of 330 Kilo Volts (KVs) and 81 kilometers of 132 KV transmission lines to Abuja.

“This is part of efforts to increase transmission wheeling capacity in the FCT and environs.

“The project is categorised into six lots and is far advanced in execution above 85 per cent in total completion by December,” he said.

The managing director said that the project was designed by the current administration to ensure that in the next 50 years, there would be no need for other substations in the FCT.

“This will be adequate and it will serve the population of Abuja,” he said.

“The government while making plans for the project has in mind that if the population of FCT increases within five to 10 years, there is a master plan that the station will serve the territory in the next 50 years.

“Construction of complete new 2x60MVA, 132/33 KV substation with 132KV line Bays at Wumba/Lokogoma including about 5km 132 underground XLPE Cable from New Apo Sub Station are ongoing,” he said.

Others are construction of 2x150MVA 330/132/33KV substation at New Apo where the managing director frown at the slow pace of work done by the contractor .

According to him, the contractor, General Electric has performed abysmally.

He said the contracts for all the substations were signed at the same time, and wondered why the slow pace of work.

“We have spent a lot of money to clear their containers which entered demurrage and this money is not part of AFD grant but TCN Internally Generated Revenue which could have been used for other projects.

“We are going to push them to finish the project on time,‘’ he said.