Markets & Finance

Firm pulls the plug on Sh15bn Kinangop wind farm project


Youth block the Nakuru-Nairobi highway while protesting against the building of a wind park in Kinangop, Nyandarua County. PHOTO | FILE

A Sh15-billion wind farm power project that was to generate 60 megawatts (MW) has been cancelled due to delays and frustrations from the local community in Kinangop, Nyandarua County.

Investors in the Kinangop Wind Park (KWP) have given up on the project, citing depletion of funds arising from delays and hostilities from the community.

The KWP said in a statement that it had failed to reach an agreement with parties in the community. Efforts to compensate affected land owners were repeatedly interfered with by the unnamed parties, the KWP said.

“The impact of the initial civil commotion has not been resolved while further incidents have occurred, creating an unsafe environment for the team to implement the project,” KWP chief executive James Wakaba said in a statement.

Due to the delay, the project can no longer be completed by the shareholders, Mr Wakaba said.

“While KWP and its partners remain committed to the provision of wind-generated power in Kenya, the decision has been made to cease implementation of the Kinangop Wind Park project given the circumstances,” said Mr Wakaba.

The project, which is backed by the Norwegian private equity firm Norfund, South African asset manager Old Mutual and Sydney-based fund Macquarie, was supposed to generate enough electricity to power 150,000 homes.

US conglomerate General Electric was to install 31.8 megawatt turbines on the site.

Trouble began in June 2014 when protests disrupted compensation negotiations between affected landowners and the energy firm.

READ: Sh15bn Kinangop wind park halted as land protests swirl

Talks between communities, county and national government officials have not yielded the expected results leading the KWP to pull the plug on the project even as investors committed funds for the wind farm.

“Throughout the twenty-one month period since May 2014, KWP and its shareholders remained committed to the project, advancing over $66 million (Sh6.6 billion) of equity to meet project costs and acting in good faith to explore all avenues to move forward with the project,” said Mr Wakaba.

Energy and similar projects are increasingly facing headwinds due to politically-instigated protests by local communities, potentially delaying the addition of much needed power to the national grid.

Last December Turkana county executive Charles Lokioto Ewoi accused Olsuswa Energy of seeking to exploit geothermal resources without first signing a memorandum of understanding with the county government, threatening to stall construction of a geothermal power plant that will inject 140MW into the national power grid.

READ: 140MW Turkana geothermal plant at stake over land row

Kenya Electricity Generating company (KenGen) faced similar protests in 2012 for its Olkaria power project.

Local protesters have also disrupted work in related projects such as oil and gas.

Tullow Oil suspended exploration in Turkana back in late 2012 after residents protested over the lack of jobs and other benefits. At the time the protests were allegedly led by a local legislator.

The KWP has no immediate plans to look for an alternative site for the wind power project.

Wind energy is emerging as a key energy source, with a number of power plants in the pipeline. Lake Turkana Wind Project (LTWP), which will be the largest wind plant in Africa, currently under construction, will produce 310 MW when completed in June 2017.

KenGen is also scaling up wind production, which it expects to account for up to six per cent of its energy mix by 2020 up from the current two per cent.