Construction of a Sh15 billion ($150 million) wind farm in Kinangop, Nyandarua has been frozen after running into strong headwinds tied to land acquisition.
The proposed 61 megawatt Kinangop Wind Park, backed by Norwegian PE firm Norfund, South African asset manager Old Mutual and Sydney-based fund Macquarie, is on the verge of collapse after locals declined to offer their land for the project.
“Development of the Kinangop Wind Park has been halted,” said James Wakaba, chief executive of KWP in a statement to Business Daily.
Mr Wakaba claimed the stalemate was being “spearheaded by local political leaders’ but did not disclose the next action for the investors.
The wind farm was supposed to be located on the Kinangop plateau but has provoked violent demonstration, including against farmers who have agreed to the deal.
“KWP instead experienced renewed incidents of civil commotion preventing safe access to the site, preventing a safe and secure environment for the team to implement the project,” added.
GE had already delivered 38 turbines each with a capacity of 1.6MW for the project and had already signed a deal to provide maintenance for the Kinangop wind farm for 10 years worth Sh5.8 billion ($58 million).
The Kinangop wind project, proposed in 2012, was scheduled to be completed by mid-2015 and supply power to the grid.
Kenya Power had signed a deal to buy power from Kinangop at Sh12 per kilowatt hour (¢12).
The project is further facing gusts of legal challenges, after some landowners moved to court seeking to stop the construction power plant over claims that the project was fraudulently approved, and that it does not meet the required standards for operation. There is already a court order stopping it.
The development of infrastructure projects such as wind farms, geothermal plants and highways are increasingly being derailed by land acquisition and compensation challenges as land owners dig in for a fat pay.
KenGen was forced to spend Sh580 million in 2013 to resettle families at Olkaria and pave the way for the development of the geothermal field.
Norfund invested Sh1.05 billion (NOK82.7 million) in KWP in 2013. The largest investor in the project however is Africa Infrastructure Investment Fund II, whose shareholders are Old Mutual Investment Group and Macquarie.
Standard Bank Group and its and its local subsidiary CfC Stanbic were the lead arrangers to underwrite $90 million of debt. Equity funding for the project is $60 million.
The Kinangop hiccups is likely to pour cold water on Kenya’s plans to add 5,000MW of mainly renewable energy to the grid in the next four years.
The wind farm is just one of a number of such projects in the country. KenGen itself has done a small one in Ngong. It also intends to develop a huge one in Meru—400 megawatts—where Blueseas is doing a 41 megawatts wind project.
The Sh71 billion Turkana Wind Power is the largest such project on the continent with a capacity 300MW. Rejected by World Bank—which claimed the country had no capacity to absorb that amount of power—it is expected to put the first 90MW of power by end of next year.