Economy

Sh1bn extra fine for delayed wind power

wind farm

The Lake Turkana Wind Power project. FILE PHOTO | NMG

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Summary

  • The Treasury has asked MPs to approve the penalty through the supplementary budget that is under scrutiny of Parliament’s budget committee.
  • The plant had faced a series of setbacks, including securing financing, which delayed construction of building transmission lines linking the wind farm to the nation grid.

Taxpayers paid an additional Sh1 billion fine to the owners of Lake Turkana Wind Power after Kenya delayed connecting the plant to the national power grid by June.

The Treasury has asked MPs to approve the penalty through the supplementary budget that is under scrutiny of Parliament’s budget committee.

The plant had faced a series of setbacks, including securing financing, which delayed construction of building transmission lines linking the wind farm to the nation grid.

Kenya had committed to pay a monthly fine of Sh1 billion through consumer bills should it fail to link the plant to the national grid by this month.

The 310 megawatts plant was connected to the grid in September against a delayed August deadline. Lake Turkana Wind Power had already fined Kenya Sh5.7 billion for delays.

Electricity evacuation

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.

Construction of the power line started in November 2015 but was delayed by land compensation demands and the closure of a major contractor.

The projects main contractor, Spain’s Grupo Isolux Corsan, closed due to financial difficulties, forcing Kenya to turn to a Chinese contractor to finish the job. Electricity from the wind park will cost Sh8.7 per unit (8.5 US cents), which is in a similar price range as geothermal power, or three times cheaper than diesel-generated electricity.

But homes and businesses are yet to feel the cheaper bills due to poor weather that has cut the share of cheaper hydro in the grid.