The Treasury has redirected Sh1 billion meant for Lake Turkana Wind Power (LTWP) line project and street lighting to financing post-Covid-19 economic recovery plans.
The decision, which puts Kenya in the crosshairs of international creditors, is, however, set to delay the taxpayers' pain of sinking more money into the contentious project.
Revised budget estimates show that Sh500 million has been cut from the Loiyangalani-Marsabit power line, which had been allocated Sh2.5 billion in the financial year starting July 1. The estimates further indicate that Sh500 million out of the Sh800 million earmarked for street lighting has been cut.
The official data, however, did not provide a breakdown on the Sh500 million expenditure for the Loiyangalani-Marsabit line.
A last-minute amendment to the supplementary budget last year averted a sovereign debt default crisis by allowing the Treasury to pay LTWP a Sh1.16 billion penalty.
The Energy ministry incurred the penalty due to delays in connecting the Lake Turkana wind plant to the national grid.
Default on the penalty could have potentially damaged Kenya’s creditworthiness status in global financial markets.
Kenya incurred a 127 million euros (Sh14.5 billion under then prevailing exchange rates) penalty for breaching the timelines set for completion of the 428-kilometre high-voltage power line from Marsabit to Suswa sub-station in Narok, the main interchange for power from different sources.
In a deal struck in 2017, Kenya committed to pay 46 million euros (Sh5.7 billion at the time) of the penalty in a lump sum, while the balance 81 million euros (Sh9.25 billion under then prevailing rates) was to be cleared over six years through a minor tariff increase.
LTWP, Africa’s largest wind farm, was commissioned in July 2018. The 310-megawatt Lake Turkana wind farm was initially set for launch in 2017 but remained idle due to delays in installing transmission lines needed to get the clean power to the national grid and customers.
The line was further delayed after a Spanish firm, Isolux, contracted to build the line went bankrupt.
Kenya then hired a Chinese company to complete the line to evacuate power from the wind farm which is expected to contribute 15 percent of Kenya’s total electricity needs.