A Microsoft data centre 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 US$1-billion in a data centre 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 Joe 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 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Kenya is moving ahead with the talks, and “it is not failed or withdrawn”, the report quoted principal secretary at Kenya’s ministry of information, John Tanui, as saying in an interview.