Further delay in Loiyangilani-Suswa to push up power bills

Lake Turkana Wind Power

A power line meant to link a wind power farm in Marsabit to the national electricity grid might be source of higher electricity bills in coming months.

This is after the Government failed to get a contractor to complete the 428 kilometre high voltage line that would evacuate electricity from the Lake Turkana Wind Power (LTWP) plant in Marsabit.

The line remains incomplete and there are doubts whether the Energy Ministry will find a new contractor to complete the job left half done by Isolux Corsán that has since wound up due to financial difficulties.

The line, whose completion was due in December 2016, is supposed to be completed by June this year, failure to which the Government will pay Sh1 billion per month to investors of the wind farm.

The Government had guaranteed LTWP it would provide them with access to the Kenyan market for their electricity as a condition for company to invest in the plant.

The Sh1 billion monthly penalty will be in addition to the Sh5.7 billion negotiated fee that has been paid to LTWP following delays in the completion of the line. The penalties are expected to be passed on to consumers once the power plant starts supplying the grid with electricity.

NO CONTRACTOR

“Already we are having six sub-contractors on the site. What we are looking for now is the contractor to finish the stringing and some of the tower erection,” Energy and Petroleum Cabinet Secretary Charles Keter said at a press conference in early January.

“We have up to June of this year, otherwise from June henceforth we will have to pay deemed energy, which as you are aware, is about Sh1 billion per month.” He added that the line is 70 per cent complete.

The Ministry has been unable to get a contractor to replace the firm, as negotiations with Spain, which financed the line, appearing to have hit a dead end.

The Ministry has for months been in talks with Spain and recently started lobbying for leeway to appoint a contractor of its choice. Spain has insisted on having a Spanish contractor to continue with the works on the power line.

They appeared to have reached a conclusion in October last year and the Kenya Electricity Transmission Company (Ketraco) then said it was in the final phases of getting a new project contractor to replace Isolux.

Ketraco Chief Executive Officer Fernandes Barasa then said he expected the new contractor to report in the course of the month but this did not happen.

“We are bringing on board another Spanish company since the financier is from Spain. The contractor can only be Spanish as the financier of the project was from the country,” he said in October.

The wind power project was put up at a cost of Sh70 billion. The money was provided by a consortium of financiers led by the African Development Bank (AfDB) and it is a mix of both debt and equity.

FAILED TO MEET DEADLINES

AfDB came on board after the World Bank declined to give partial guarantees, noting that it would not be commercially viable mostly on the back of inadequate demand for power in Kenya, with the Bank advising LTWP to undertake the project in phases.

Internet giant Google has committed to acquire 12.5 per cent stake in the project at a cost of Sh4 billion upon completion.

The 400 kilovolt transmission line from Loiyangilani to Suswa, which is being put up at a cost of Sh15 billion, has failed to meet several deadlines with more recent ones being December 2016 that was extended to March 2017.

It is meant to evacuate power from the 310 megawatts wind farm, which was ready to start power production late 2016.

Construction works on the line started November 2015 and was expected to be completed in August 2016.

Other than the financial challenges that faced the Spanish contractor, the high voltage line traverses several counties and cutting through land owned by numerous different individuals.

The National Land Commission has spent considerable amount of time negotiating land acquisition. 

 

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