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Cost of high voltage power line doubles as delays stalk project

By Macharia Kamau | August 21st 2018
Construction of the line has faced challenges after the Spanish contractor Isolux Corsan went bankrupt.

The cost of constructing a high voltage line to evacuate power from the Lake Turkana Wind Power Plant (LTWP) has nearly doubled.

The 428-kilometre power transmission line, which was initially supposed to cost Sh15 billion, will now cost Sh28 billion. This means taxpayers will pay Sh13 billion more.

The Kenya Electricity Transmission Company (Ketraco) in a breakdown of its projects prepared for presentation to the Parliamentary Committee on Energy said the Loiyangalani-Suswa transmission line would cost Sh28 billion on completion.

This is an 86 per cent jump in the cost of constructing the power line that has already proved costly for taxpayer due to delays.

Queries to Ketraco as to how the cost of putting up the line had increased to Sh28 billion went unanswered and instead, the agency said it had sorted out the issues that stood in the way of completing the project.

Construction of the line has faced challenges after the Spanish contractor Isolux Corsan went bankrupt. This saw Ketraco terminate its contract.

It has since awarded the contract to a consortium of two Chinese firms – NARI Group Corporation and Power China Guizhou Engineering Company - which are expected to complete the line by the end of this month.

Ketraco Chief Executive Fernandes Barasa told an energy forum last week the project is 90 per cent complete and the agency expects to energise the line by August 31.

The delays have, however, come at a cost, with the owners of the wind farm in Marsabit County having been paid Sh5.7 billion by the State as a penalty for failing to complete the line in time.

Failure to have power infrastructure in place by the end of last year denied LTWP the opportunity to start earning from the sale of electricity to Kenya Power. If the line is not completed by August, it will attract more penalties.

The project commenced in 2014 and was scheduled for completion at the end of 2016.

“(Acquisition of) wayleave has been one of the main challenges that we have had to face as a company. However, we do not have any pending community issues,” said Ketraco in a statement responding to queries by Financial Standard.

“The works on the lines are proceeding with no interruptions from the community. We are confident that we will complete the line in good time.” The acquisition of a new contractor may have seen the costs jump up to the current levels. However, at the time of terminating Isolux Corsan’s contract, not all the Sh15 billion had been spent by the contractor.

Energy Ministry officials had in February told Parliament that the ministry needed Sh12.9 billion to complete the line.

The line was initially financed through a loan by the Spanish Government, but it pulled the plug on the financing when its contractor – Isolux – was kicked out by Ketraco.

The Government took over of the project, including its financing.

The transmission line is supposed to evacuate power from the 310-megawatt LTWP plant to the national grid.

If it is not commissioned by September 1, a Sh1 billion monthly penalty will be paid to plant owners.

The Energy Ministry said one of the conditions to the new contractor was that they would bear the penalties should they fail to finish the line in time, insulating taxpayers from further penalties. The Auditor General has in the recent past queried whether Ketraco undertook any due diligence before hiring the troubled Isolux Corsan. Other than the LTWP transmission line, the company was also in a consortium of firms putting up the Kenya-Ethiopia power line.

In a recent report, the Auditor General questioned ‘whether Ketraco management satisfied themselves that the initial contractor was technically and financially qualified for the job before awarding of the contract.’

The project is among the many Ketraco projects that have stalled owing to various challenges, including demands for huge compensation from contractors and landowners.

Compensation demands

The Auditor General also queried the causes of delays for transmission lines that Ketraco has been constructing. Mr Edward Ouko said projects valued at Sh38 billion were facing delays as of June 2015.

This value has since more than doubled, with Ketraco reporting delay in completion of power lines valued at over Sh112 billion. “We have had a number of challenges to do with the community,” said Ketraco.

“Some of these challenges include excessive land compensation demands from the project affected persons, lack of clear national policies on wayleave compensation, speculative land subdivision ....” There are also too many cases of independent land valuers giving large margins on the same property and security concerns, especially in parts of northern Kenya that keep on disrupting the ongoing works. Energy Cabinet Secretary Charles Keter commenting on the Loiyangalani-Suswa line said the project would go on despite the court cases.  

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