Taxpayers risk paying a monthly fine of Sh700 million after the government failed to build a power line connecting Lake Turkana Wind Power project to the national grid.
The government had committed to link the mega wind farm to the grid by January to allow the owners of the plant to earn an income from power sales in time to pay bank loans in June.
Now, the 428km high-voltage line linking the power station to homes and businesses will be ready at the earliest in April, transferring part of the loan obligations to the government.
The Lake Turkana Wind Power scheme currently has 234 turbines and today injects an estimated 100 megawatts into the national grid.
Carlo van Wageningen, director, Lake Turkana Wind Power, says his firm is negotiating with banks, which it owes €440 million (Sh47 billion), to delay the repayment date and save taxpayers from making early payments.
“The clause in the contract was not meant to penalise government or consumers. So, it’s a contractual obligation, not penalty,” he added.
“The first payment is due in June. It’s a big amount. We need three to four months of generation to raise the amount.”
Construction of the high-voltage line has been hit by delays blamed on land compensation hiccups in the areas it traverses such as Nyandarua, Laikipia and Marsabit.
The transmission line was approved in August 2014 and the government agreed to pay owners of the mega wind farm a monthly compensation should there be delays in injecting power into the national grid after January 2016.
The line was expected to be completed by October to harvest the first 50 megawatts that the developers expect to commission in September next year.
“By mid-march all turbines will be up. We realistically expect full 310 megawatts to be injected into the grid in June,” said Mr Wageningen.
In July, Kenya Electricity Transmission Company (Ketraco), which is overseeing the construction of the line, said the high-voltage power line was 52 per cent complete.
Ketraco managing director Fernandes Barasa said delays beyond January would lead to monthly payment of Sh700 million to power plant owners.
There will be no penalty passed to consumers. We are talking with them,” said Petroleum and Energy PS Joseph Njoroge said.
The Sh20 billion line will transport electricity from the Lake Turkana wind power project in the northern town of Marsabit to the national grid at Suswa substation in Narok.
The full 310 megawatts from the wind farm, the largest in Africa, will be injected into the national power grid by July 2017.
It will rival other big African wind schemes in Morocco and Egypt and change Kenya’s power generation mix that mainly comprises expensive thermal generators, geothermal and hydro power.
Kenya aims to expand installed capacity to about 6,700 megawatts by 2017, up from 1,700 megawatts in 2013.
Lake Turkana Wind Power will sell electricity to Kenya Power at Sh8.5 per unit (8.42 US cents) under a 20-year power purchase agreement.