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Economy

Homes face Sh1bn monthly Turkana wind power fine

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

Homes and businesses risk paying additional Sh1 billion in monthly electricity bills should Kenya fails to connect Lake Turkana Wind Power to the national power grid by June.

Energy secretary Charles Keter said the power line linking the 310-megawatt wind power plant to national grid was 70 per cent complete, with the remaining work being putting up high voltage cables.

But Lake Turkana Wind Power — which has already fined Kenya Sh5.7 billion for delays — will offer an additional penalty of Sh1 billion monthly should Kenya fail to connect the plant to the grid beyond June.

“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 ($9.7 million) 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 wind 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.

Mr Keter said the government was expected to decide next week whether to wait for Spain to assign another contractor, or go ahead and get their own.

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.

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

The AfDB pay was to be triggered by the risk of Kenya Power failing to pay Lake Turkana Wind Power over delays of the transmissions line. The pay could have hurt Kenya’s credit rating.

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