Turkana wind power project closes in on full funding

By Macharia Kamau

KENYA: The wind power project planned for northern Kenya has received a lifeline after the African Development Bank (AfDB) approved a Sh12.5 billion ($149.5 million) loan.

The Lake Turkana wind power project has been dogged by delays due to unavailability of funding, with the World Bank withdrawing its support late last year.

In addition to the loan, AfDB will play an expanded role as lead arranger by helping Lake Turkana Wind Power (LTWP) — the power project’s implementing agency — source for additional funds.

LTWP plans to build a wind power station in Turkana County with an electricity generation capacity of 300 megawatts at a projected cost of Sh73 billion ($873 million).

AfDB added that northern Kenya will also benefit from the infrastructure required for the wind farm.

“The approval of the $149.5 million financing is a major milestone in the development of the project. It is also proof that financial close is now in sight,” said Carlo Van Wageningen, the chairman of LTWP.

Financial close allows for the disbursement of funds so that a project’s implementation can begin.

The AfDB will be taking a lead role in developing what will be the largest wind power project in Africa and will spearhead the project’s transactions.

“The bank has built the confidence of potential investors on mitigation of environmental and governance risks, ultimately attracting additional investors in the project such as commercial banks,” said Gabriel Negatu, AfDB’s regional director for the East Africa Resource Centre.

AfDB will help in securing an additional $165.1 million in senior debt and a further $75.4 million of subordinated debt.

The bank said it would officially launch the project to the public and hold a series of presentations for potential lenders in the coming weeks.

“As requested by the Government of Kenya, the Bank will provide a partial risk guarantee to protect the project against the risk of delays in the construction of the transmission line, thereby providing additional comfort to prospective lenders,” said Negatu.

The Government has already secured funding for a 428 kilometre transmission line that will evacuate electricity from the farm in Turkana to the national grid at Suswa.

The ambitious project is expected to further diversify the country’s source of electricity as well as reduce reliance on electricity generated by hydro dams.

Kenya currently has an installed electricity generation capacity of about 1,600 megawatts, with potential for more than 7,000MW.

LTWP plans to commence construction by December and commission the initial capacity of between 50 and 90MW by 2015. It expects the wind farm to be fully operational by 2016.