A Microsoft data center site in East Africa has been delayed by disagreements with the Kenyan government over the company’s request for guaranteed payments, Bloomberg News reported on Sunday citing people familiar with the matter.
In May 2024, Microsoft partnered with UAE-based AI firm G42 to invest $1 billion in a data center in Kenya as part of its efforts to expand cloud-computing services in East Africa. The project was announced during Kenyan President William Ruto’s state visit to Washington under the Biden administration.
The facility was set to run entirely on geothermal power as well as provide access to Microsoft’s Azure through a cloud region for East Africa.
Microsoft and G42 asked the Kenyan government to commit to paying for a certain amount of capacity annually, but the talks broke down when it couldn’t provide the guarantees at the level Microsoft requested, the Bloomberg report said.
The Bloomberg report added that the group might ultimately decide to scale back the project.
Kenya is moving ahead with the talks, and “it is not failed or withdrawn,” Bloomberg quoted principal secretary at Kenya’s Ministry of Information John Tanui as saying in an interview.
“The scale of the data center they wanted to do still requires some structuring,” he said, adding that power requirements are still under discussion.
Microsoft, G42, and Kenya’s Information Ministry did not immediately respond to a Reuters request for comment. Reuters could not immediately verify the Bloomberg report.