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Economy

Consumers face Sh13.9bn a year fine for wind power delay

Energy secretary Charles Keter. FILE PHOTO | NMG
Energy secretary Charles Keter. FILE PHOTO | NMG 

Homes and businesses risk paying Sh13.9 billion per year through their electricity bills as penalty should Kenya fail to connect Lake Turkana Wind Power to the national power grid this year.

The Treasury has made a provision of €110.4 million (Sh13.9 billion) in its 2018 budget policy statement towards the 310-megawatt wind farm in payments termed as deemed generated energy.

This is at least Sh1.9 billion higher than what the Ministry of Energy quoted early this month for the fines.

Energy secretary Charles Keter early this month said the power line linking the $847 million (Sh87.2 billion) power plant to the national grid was 70 per cent complete, with only high voltage cables remaining to be put up.

The developers of the Lake Turkana Wind Power have already fined Kenya Sh5.7 billion for the delays.

“We have up to June of this year, otherwise from June henceforth we will have to pay deemed energy, which as you are aware, is about Sh1 billion per month,” said Mr Keter.

The wind farm, the largest in Africa, with a capacity of 310 megawatts — enough to power up to one million homes — was supposed to inject the first 50 megawatts into the grid in October 2016 and the whole capacity by last July.

But delays in construction of the 428-kilometre power line has hampered electricity evacuation from the northern town of Marsabit to Suswa substation in Narok, the country’s main interchange for power coming from different sources.

This has left the wind farm developers stranded with power, amid pressing cash needs such as loans repayment, an obligation that taxpayers will shoulder.

Danish wind turbine maker Vestas Wind Systems, the supplier of the wind farm’s 365 turbines, said last year the farm was ready for launch but would be idle until the government installs the transmission line.

Construction of the power line started in November 2015 but was delayed by landowners’ compensation demands and the closure of a major contractor. The projects main contractor, Spain’s Grupo Isolux Corsan, closed due to financial difficulties.

The Treasury allocated the Sh5.7 billion in a September supplementary budget to be wired to Lake Turkana for last year’s delay and fine will be recovered this year from consumers via monthly bills.

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