Turkana’s 300MW wind power project secures Sh73b funding

Turkana’s 300MW wind power project secures Sh73b funding
AfDB’s Regional Director Gabriel Negatu (right), Ministry of Energy Principal Secretary Joseph Njoroge (centre) and LTWP chairman Carlo van Wageningen at the signing of a loan agreement Monday. [Photo: Beverlyne Musili/Standard]

By Macharia Kamau

Kenya: The construction of the 300 Megawatt wind powered electricity generation plant in Turkana County is set to commence after the project implementer, Lake Turkana Wind Power (LTWP) received a loan of about Sh73 billion to kick start the construction.

 The syndicated loan of Sh73 billion (Euros 623 million) is from consortium of financial institutions led by African Development Bank.

The deal is among the largest private sector investments in Kenya to date. Following the sealing of the deal, construction works are expected to commence in the coming months and completed by 2016. 

This will add 300MW to the national electricity grid. “The LTWP project has been under private development since 2005 and that is in itself a remarkable testimony to the stability and soundness of the Kenyan electricity sector as well as the environment for Independent Power Producers,” said Carlo Van Wageningen, Chairman, LTWP. 

The project has also been billed to be Africa’s largest single wind power projects and has attracted a huge cross section of financial institutions with AfDB being the lead arranger.

More grants

Other financiers include European Investment Bank, the Standard Bank of South Africa, Nedbank, FMO, Proparco, East African Development Bank, PTA Bank, EKF, Triodos and DEG. The Government of the Netherlands has also provided a grant of Euros 10 million (Sh1.8 billion) and the European Union, a subsidised facility through the EU Africa Infrastructure Trust Fund a further Euros 25 million (Sh4.5 billion).

The project is seen as key in increasing Kenya’s installed electricity generation capacity that stands at about 1,600MW. LTWP said electricity from wind can retail at Sh9 per unit against the current Sh18. Once it is operational, the project is expected to generate up to $150 million (Sh12.9 billion) per year in foreign currency savings to Kenya through fuel displacement costs. Fuel has been a major cost component for electricity consumers in Kenya.

The Lake Turkana wind power project has however been dogged by delays, having initially been slated to commence construction in 2012.

It also suffered a major blow and lost some credibility in late 2012, when the World Bank withdrew support for the project. 

The institution withdrew partial risk guarantees to loans advanced to LTWP due to lack of infrastructure to evacuate power from the wind farm to the national grid as well as a power purchase agreements with Kenya Power that would have put the consumers at a disadvantage.

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