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Treasury CS Henry Rotich (second right), with Standard Chartered Bank Kenya and East Africa chief executive Lamin Majang (second left), Kenya Electricity Transmission Company Limited (KETRACO) managing director and CEO Joel Kiilu (right) and Lake Turkana Wind Power Plant Project chairman Mugo Kibati (left) during the signing of legal agreements to guide the management of the implementation of Lake Turkana Wind Power Project. PHOTO | DIANA NGILA NATION MEDIA GROUP
By IMMACULATE KARAMBU
The construction of one of Africa’s biggest power projects is expected to begin next February after a bank agreed to provide risk guarantee for the undertaking.
African Development Bank (AfDB) and Standard Chartered Bank will insure Lake Turkana Wind Power Limited for a maximum of Sh2.2 billion, paving the way for commencement of the construction of the 300 megawatts wind power plant.
The guarantee covers the risk of failure by the government through the Kenya Electricity Transmission Company (Ketraco) to develop the necessary infrastructure to evacuate electricity generated by the project to the national grid.
It will also cushion Lake Turkana Wind Power against failure of payment by Kenya Power, according to a power purchase agreement signed by both institutions.
“The Lake Turkana wind power project will be implemented under a public private partnership arrangement. In providing partial risk mitigation to the project, the government is sending a signal of its commitment to promote foreign direct investment in Kenya,” Treasury Cabinet Secretary Henry Rotich said.
He spoke in Nairobi yesterday at a ceremony in which the agreements were signed.
PUTS AN END TO SEARCH
This puts an end to the long search for an insurer of the project that has delayed its implementation and increased its total cost to 623 million euros from an initial budget of 585 million euros due to extensions of contracts the firm had entered into with contractors.
Of the total cost of the project — Sh52.1 billion (473 million euros) — is the debt component.
A consortium comprising KP&P Africa BV, Aldwych International, Industrial Development Corporation of South Africa (IDC), Industrial Fund for Developing Countries (IFU), and Norwegian Investment Fund for Developing Countries (Norfund) is behind the project which will be located at Loyangalani in Marsabit County.
GREEN ENERGY PROJECTS
The wind power plant is among key green energy projects listed by the government under the plan to increase national power generation capacity by 5,000 megawatts by the end of 2016. This is intended to reduce the cost of electricity by half.
The first 50 megawatts from the project are expected to be added to the grid 27 months after commencement of construction. The entire wind farm will be operational in 32 months.
Although wind is considered a cheap source of electricity, only 25 megawatts from the Ngong wind farm operated by Kenya Electricity Generating Company (KenGen) are fed to the national grid.
Lake Turkana Wind Power Limited will sell at Sh7.8 (8.7 US cents) per unit.
Data from Kenya Power indicates that last month, the utility bought wind power at Sh7.13 per unit.
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