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According to the Cabinet, the Bomet-Narok line will be built with €250 million (Sh37.5 billion) from the African Development Bank.
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This will help to deal with the overloading of transmission lines that cause outages.
President William Ruto has directed the Ministry of Energy to deal with the challenge of power failure.
Ruto, who chaired the Cabinet meeting on Wednesday, said frequent power outages were hurting Kenya’s investment profile.
The Cabinet resolved that the transmission line system should be unbundled so that power failure in one part does not affect the entire country.
According to the Cabinet, the Bomet-Narok line will be built with €250 million (Sh37.5 billion) from the African Development Bank.
This will help to deal with the overloading of transmission lines that cause outages.
Cabinet said the line, which was funded in 2016, has not been built due to legal disputes.
Additionally, a €57 million (Sh8.5 billion) KenGen solar power project at the Seven Forks Dam will safeguard against power failure.
The 42MW project has a huge battery storage and when power fails, the stored energy kicks in.
The project also helps save hydro-power at the five dams that make up the Seven Forks.
This comes after the country experienced three nationwide power outages in less than six months.
Energy CS Davis Chirchir said the third nationwide blackout was caused by an overload in the Kisumu- Muhorono line.
The CS noted that the overload forced the system to shut down.
He said the line was planned to carry 80MW but was carrying 149MW as of the time of the blackout.
"We have not invested much in the networks. We plan on giving out several networks to be built by private firms. This will ease putting pressure," he said.
He noted that a new substation and a line of 90 km will relieve the capacity on the Muhoroni - Kisumu line.
"We will build a new 33KV line between Narok and Bomet to prevent constant power outages. We will have reduced overload line to prevent plunging the country into darkness," he said.
"The new line will take 20 months to complete. It will be funded by the African Development Bank and Japan."
The power outage that took place on Sunday was experienced from 8 pm.
The outage disrupted services including two terminals in the Jomo Kenyatta International Airport for several hours.
Kenyans came out to air their frustrations demanding answers over the recurring power disruptions.