Sh6bn Malindi solar power plan at risk as companies feud

Several global companies have moved to take advantage of Kenya's favourable climate to establish solar farms. FILE PHOTO | NMG
Several global companies have moved to take advantage of Kenya's favourable climate to establish solar farms. FILE PHOTO | NMG 

A Danish and Kenyan firm are locked up in a dispute over a Sh6.3 billion ($63 million) Malindi Solar project, putting in jeopardy a 40 megawatts power supply deal with Kenya Power #ticker:KPLC.

The Danish firm Sun Energy ApS is accusing Malindi Solar Group Limited of breaching their contract after what it says are plans by the Kenyan firm to sell its stake in the multi-billion shilling project.

The firm has now obtained a court order stopping the Malindi Solar Group from disposing off its stake pending determination of the case.

“A temporary injunction be and is hereby issued restraining the defendant from evaluating, reviewing and in any way dealing with any bids they may have received in response to the Expression of Interest issued by Globeleg Group on behalf of Malindi Solar Group and dated December 2017,” ordered Justice Grace Nzioka.

Sun Energy claims that it was retained by Malindi Solar to undertake feasibility studies and prepare technical reports on the project, which is a prerequisite for Kenya Power to enter into a power purchase agreement.

This was after Kenya Power granted the Malindi Solar rights to develop, construct and operationalise the 40MW solar plant.

The firm says that following successful feasibility studies, Malindi Solar has entered a power purchase agreement with Kenya Power.
The Danish firm says it was part of the agreement that it will procure and construct the solar field to maturity.

But the firm claims that Malindi Solar is in the process of selling its entire shareholding to a company called Globeleq Group.

Globeleq Group has in turn called for expressions of interest for developing the solar field, which the firm says will edge it out of the deal.

Sun Energy says it has already spent about $630,000 in the feasibility studies and being forced out without recouping its money back will cause it a huge loss.

The firm further claims that it has entered into binding negotiations with suppliers, and has engaged professionals and financiers who will certainly make claims for the breach of contract, in the event the deal aborts.

Sun Energy further says Malindi Solar Group is “a special purpose vehicle” incorporated to undertake that single project and will have no means of covering any claims that might be made against it.