State gives wind energy drive shot in the arm

By John Oyuke

After more than a year of uncertainty, the Government is back on board with a scheme it hopes will empower Independent Power Producers lining up to undertake crucial power projects in the country.

The Government signaled keenness to assist investments in the sector when it agreed to start issuing Letters of Support to the private sector and development lenders for energy projects last week.

The first such letter of comfort was signed between Treasury and Lake Turkana Wind Power Ltd, the largest wind power project in Africa and Kenya’s most ambitious green energy venture yet.

The Lake Turkana wind project is one of the biggest investments in the country. [Photo: courtesy]

Finance Permanent Secretary, Joseph Kinyua, said the letter would form the basis for other five IPPs to be signed soon.

The Lake Turkana wind project stands out in two main areas. First, it is one of the biggest investments in the country, investing in excess of Sh50 billion.

Secondly, the venture would generate 300 Megawatts of green energy, an area of increased focus as the world is encouraged to cut carbon footprints.

This move dispels earlier report in sections of the media that Government was unwilling to support investors in the energy sector.

"The correct position is that the Government has been exploring a framework of engaging with IPPs in a sustainable manner," he said during the signing of the Letter of Support in Nairobi.

He said the Government had to ensure taxpayers’ interests are safeguarded while ensuring investors get return on their money.

The Deputy Managing Director, Mr Christopher Staubo, represented Lake Turkana Wind Power while Kinyua and Energy Permanent Secretary Patrick Nyoike represented the Government at the signing ceremony.

Kinyua said the signing of the Letter of Support is important since it shows commitment on the part of Government to private investments.

"This demonstrates the commitment of the Government to the project and that in the unlikely event that Kenya Power and Lighting Company (KPLC) is unable to fulfill its obligations, it would take over," he added.

He said since the Letter of Support is not an explicit guarantee, the country’s public debt statistics are not adversely impacted upon.

"After consultations with our development partners, investors, and financiers, a framework that is agreeable to all parties has been agreed upon," said Kinyua.

The other part of the new framework is that Independent Power Producers would obtain liquidity support through the World Bank’s International Development Association Partial Risk Guarantees. The Multilateral Insurance Guarantee Agency (MIGA), the Bank’s political risk insurance arm, would cover termination and political risks.

In addition to MIGA that offers political risk insurance to promote foreign direct investment, the Nairobi-based African Trade Insurance Agency (ATI) has confirmed it has been holding discussions with several renewable energy investors.