Economy

Bankrupt contractor leaves taxpayers with Sh12bn power line bill

turkana

Turkana Wind Power substation. FILE PHOTO | NMG

Taxpayers will pick up a Sh12.3 billion bill for completion of the Suswa power transmission line after a Spanish contractor sunk into bankruptcy.

Energy principal secretary Joseph Njoroge told Parliament that the government took over the loan from Isolux, which filed for bankruptcy in Spain in July.

“We had a challenge over the Loyangalani-Suswa line. The government took over the loan from Spanish government and requires Sh12.295 billion to undertake the project to completion,” Mr Njoroge told the Energy committee chaired by David Gikaria during the scrutiny of the ministry’s budget for 2018/19.

He said as a result of the exit of the Spanish contractor, there are works that were left and are yet to be done.

“We have factored in the cost of the loan. The government is required under the financing agreement to make good the loan left,” he said.

Last September, Kenya asked Spain to nominate a new firm to complete the much delayed Lake Turkana wind power transmission line after it terminated an earlier contract awarded to a debt-ridden Isolux. About 70 per cent of works had been completed by the time Kenya terminated the contract.

The power line from Loyangalani to Suswa was to be funded by the Spanish government to the tune of €142 million (Sh15.7 billion).

READ: Spanish firm sues to salvage Sh17bn Turkana power line deal

The line will evacuate electricity from the 300-megawatt Lake Turkana Wind Power project, billed Africa’s largest wind farm.

Nairobi has asked Madrid to scout for a new contractor to complete works on the 428-km high-voltage line started by Isolux.

The project is tied to a Spanish contractor given the credit is from the Spanish government.

Isolux has since moved to court to challenge the contract termination notice dated August 14 from the Kenya Transmission Company (Ketraco), which is overseeing the project.

The State is racing to jump-start works on the project beleaguered by multiple headwinds, and avoid paying a monthly fine of Sh700 million for failure to complete the transmission line in time.