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Chinese contractors risk Sh1b penalty as deadline for Loyangalani-Suswa line nears

BUSINESS
By Macharia Kamau | August 11th 2018
Some of the turbines at Lake Turkana Wind Power farm, near Lake Turkana in Laisamis, Marsabit County. [Ali Abdi, Standard]

 

The consortium of Chinese firms constructing high capacity power line for evacuating electricity from the Lake Turkana Wind Power plant is running out of time and might be penalised for delayed delivery.

According to the Ministry of Energy, the Loyangalani-Suswa Transmission line is due for completion on August 31. The contractors have, however, completed 84 per cent and are only left with less than three weeks before the deadline lapses.

The contractors had committed to have the line ready by end of this month. Failure to deliver the line, the companies would pay a penalty of Sh1 billion a month until the line is ready.

The money would go to owners of the wind farm, who have been guaranteed that the infrastructure will be ready to enable them to monetise their investment by selling electricity to Kenya Power. Previous delays have seen the Kenya Government pay penalties to LTWP.

Energy Cabinet Secretary Charles Keter said most of the work on the transmission line is complete. Speaking when he met the Parliamentary Committee on Energy, Mr Keter added that the taxpayer is shielded in the agreement that the Government signed with the Chinese firms, who will now pay any penalties due to late delivery of the project.

“We have done 84 per cent of the work and we have eight teams doing stringing. We are even using drones in areas which have not been cleared. We agreed with the contractor that if he fails to complete in time, he will pay the penalty of Sh1 billion,” he told the committee chaired by Nakuru Town East MP David Gikaria.

The line is expected to evacuate power from the 310-megawatt wind plant in Marsabit. It was due for completion by end of 2016 but stalled due to a mix of factors including financial problems that Isolux Corsan – the initial contractor – experienced as well as lengthy land acquisition procedures.

Filed a suit

The Kenya Electricity Transmission Company (Ketraco) terminated Isolux Corsan’s contract last year and gave the job to a consortium made up of NARI Group Corporation and Power China Guizhou Engineering Company (PCGE), which committed to handing the project over to Ketraco by August 31 this year.

Problems with the community, however, appear not to go away.

A number of landowners are seeking more pay for their land and have even filed a suit in court to prevent Ketraco from proceeding with construction until they are paid what they say their land is worth.

Keter, however, said he had given the contractors the go-ahead to build the line but did not elaborate where they would put up the line in the absence of consent from some of the landowners.

“It is not right when you tell me to pay Sh10 million for a parcel of two acres of land. How do you give a valuation of Sh5 million per acre of land which in reality is Sh200,000?” he posed.

“We have agreed with our colleagues at Interior Ministry to provide security on land sites where we have a dispute. To stop us from constructing the line and subject us to Sh1 billion penalty is not acceptable.”

The Government has already paid Sh5.7 billion to LTWP, which was a negotiated penalty for missing the 2016 deadline.

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