Ecobank in Sh2.3bn row on wind power delay

Construction works for the Turkana Wind Power substation in Laisamis, Marsabit County. FILE PHOTO | NMG
Construction works for the Turkana Wind Power substation in Laisamis, Marsabit County. FILE PHOTO | NMG 

Ecobank Kenya has obtained a court order stopping payment of dues owed a collapsed Spanish contractor for construction of transmission lines linking Lake Turkana Wind Power to the national grid in a Sh2.3 billion row.

The Kenya Electricity Transmission Company Limited (Ketraco) has been stopped from paying Isolux Ingenieria SA any outstanding arrears for works on the transmission line outside an account the Spanish firm operates at Ecobank.

The lender paid guarantees or penalties of Sh2.2 billion to the Ketraco after the main contractor building the 428-kilometre power line, Spain’s Group Isolux Corsan, closed due to financial difficulties and left the line partially complete.

Ecobank through its lawyers Nyaanga & Mugisha Advocates says the Spanish firm wants the Ketraco to settle its unpaid fees through another bank, arguing it would complicate the recovery of the Sh2.3 billion that includes a loan of Sh134 million.

The Treasury also wired Sh5.7 billion to Lake Turkana Wind Power in September as compensations for delays in completing the transmission line. The fine will be recovered this year from consumers via monthly bills.

“This honourable court does issue an order of injunction restraining the 2nd defendant (Ketraco) up to May 30, 2018, from paying to the first defendant any pending certificate amounts or any negotiated sums…other than through the first defendant (Ecobank ) account,” ordered high Court Judge Francis Tuiyot.

Ecobank reckons that it will be unfair for collapsed Spanish firm to be paid its dues while the Kenya lender had paid the performance guarantees of Sh2.2 billion for failed completion of the transmission line.

The guarantee was supposed to assure the Ketraco that the Spanish firm would meet the full terms of the contract.

“In view of the ongoing bankruptcy in Spain against Isolux Ingenieria, removal of its known property from the jurisdiction of this court will occasion total loss to Ecobank claim and thus render this suit futile,” the bank said while seeking the freeze of the Spanish dues.

Construction of the power line started in November 2015 but was delayed by landowners’ compensation demands and the closure of the Spanish contractor.

This has left the wind farm developers stranded with power amid pressing cash needs such as loans repayment, an obligation that saw the Treasury wire the Sh5.7 billion.

Delays in making the payment could have seen the African Development Bank pay €20 million (Sh2.4 billion) to the owners of Turkana Wind Power and financiers of the plant under guarantee agreement.

NARI Group Corporation and Power China Guizhou Engineering Company, a consortium of Chinese companies, has since been awarded a Sh9.6 billion contract to complete the transmission line linking Lake Turkana Wind Power to the national grid by August 31.