Wind power project stalls as Spain contractor bankrupt

Engineers at work onn one of the foundations for kthe installation mof turbines in the sh70 billion Lake Turkana Wind Project in Marsabit County

Completion of the Sh15.7 billion Lake Turkana Wind Power (LTWP) transmission line now hangs in the balance after the main contractor, Isolux Corsan of Spain, folded.

Construction of the 428km high-voltage line to evacuate electricity from the 300-megawatt Lake Turkana Wind Power, Africa’s largest wind farm, commenced in 2015 and has stalled since the Madrid-based firm started experiencing a financial crunch.

The project is funded by the Spanish and Kenyan governments and was awarded to Isolux Corsan, the seventh largest contractor in Spain.

In the deal, the Government was to directly pay suppliers and recover the cash later from the €42.7 million (Sh4.7 billion) balance from the Spanish Government.

However, the work is being undertaken by subcontractors, who include EGMF Kenya, Elemech Engineering, Afrikon and Tamani, who are jointly demanding Sh700 million.

Weak position

“The payment terms for the subcontractors are 120 days, which is quite unusual in the industry. This is due to the weak financial position the contractor is in,” said one of the subcontractors who spoke on condition that they would not be identified.

He said Isolux Corsan had been unable to honour the terms, resulting in delayed payment of more than 210 days. The subcontractors were to be paid directly by the Government through Kenya Electricity Transmission Company (Ketraco).

They are now demanding to know the next course of action, alleging there is no clear strategy by Ketraco on what will happen to their dues. They allege that they owe Sh1.6 billion to suppliers.

Ketraco, however, said it is not responsible for the payments to subcontractors.

“Ketraco is not obligated to settle the payments to the subcontractors since the contract was between us and Isolux,” said Ketraco Head of Corporate Affairs Sulea Mulambo.

The latest impasse comes at a time the Government and Lake Turkana Wind Power are locked in a wrangle over payment of a Sh700 million monthly fine for the delayed transmission line, which was to evacuate electricity from the wind farm into the national grid.

The Energy ministry, Ketraco and Kenya Power have since disputed the Sh700 million penalty and LTWP was yet to table a technical report showing the project’s output as required in the power purchase agreement.

LTWP introduced the penalty after the Government failed to meet the December 2016 deadline to complete the transmission line to evacuate the first 50 MW to the grid.

[email protected]