Monday, 8 December 2014

Treasury Signs Sh52b Wind Power Project Deal

The National Treasury has signed a Sh52.1 billion Public Private Partnership (PPP) agreement for the 300 megawatt (MW) Turkana Wind Power Project, clearing the last hurdle for implementation of the mega project.

Private sector players who also signed this document were African Development Bank (AfDB) and Standard Chartered Bank Kenya Limited. Others were the Kenya Electricity Transmission Company (Ketraco) and Lake Turkana Wind Power Limited (LTWP).

The wind farm site, covering 40,000 acres (162km squared), is located in Loiyangalani district, Marsabit West County, in North-Eastern Kenya, approximately 50km north of South Horr township. This independent power project will comprise 365 wind turbines (each with a capacity of 850 kW), an associated, overhead electric grid collection system and a high voltage substation.

“This investment will no doubt make a big impact on the economy of Marsabit and the country at large,” said Henry Rotich, National Treasury cabinet secretary.

The Government through Ketraco will develop the necessary transmission infrastructure to evacuate the power generated to the national grid.

The legal agreements signed yesterday in respect of the PPP financing for the project amounts to 473.5 million Euros (Sh52.1 billion) and includes reimbursement and a credit agreement between Standard Chartered Bank, Ketraco and Government of Kenya.

There is also a project agreement between Ketraco and AfDB in which the former undertakes certain obligations to the fund with respect to the transmission inter-connector project.

The Lake Turkana Wind Power Project also includes upgrading of the existing road from Laisamis to the wind farm site, which is partly financed by the Dutch government and is a distance of approximately 204km.

In addition, the project will build an access road network in and around the site for construction, operations and maintenance. Ketraco, with concessional funding from the Spanish government, is constructing a double circuit 400kV, 428km transmission line to deliver LTWP electricity along with power from other future plants to the national grid.

After more than eight years of delay, contractors will from next year move to the site of the 300 MW Turkana Wind Power Project. But this will only happen after all the necessary road and railway networks needed to move turbines and other heavy equipment, are put in place.

The power produced will be bought at a fixed price by Kenya Power (KP) over a 20-year period in accordance with the signed Power Purchase Agreement (PPA).

The lead arranger of the debt financing is the African Development Bank with Standard Bank and Nedbank Capital of South Africa as co-arrangers. The financing agreement was signed in March this year, clearing the way for construction of Africa’s largest wind power project.

Turkana which covers a semi-arid part of Kenya is known for drought, hunger and poverty. It also has an unusual climatic phenomenon —Lake Turkana has one of the best wind resources in the world. The project is estimated to cost 623 million Euros or Sh 75 billion and is considered the largest, single private investment in the history of Kenya.

Source: Standard Media Group

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