Tuesday, August 21, 2012

Africa’s largest wind project still steaming on



A wind power farm: LWTP steamingon
THE LAKE TURKANA Wind power project, Africa’s largest wind power farm is on course. However, it is running behind schedule because guarantee from the World Bank are yet to be granted, investigations by this publication have established.

This puts paid to  rumours that the government has poured cold water on the project. The World Bank, which is to co-guarantee the €582 million debt, has slowed down the progress on the project. This is because it came on the scene only this year and has to do some due diligence of its own before giving the nod. The other co-guarantor, the Kenya government, has already issued its letters of support.

Due to the comfort from the government’s commitment, all contracts necessary have been signed and loan documentations are in place. Among the development contracts in place include; Aldwych international will oversee construction and operations of the plant.  Vestas BV will provide the maintenance of the plant in contract with LTWP.  

The debt financing is being provided by a consortium led by the African Development Bank. Standard Bank of South Africa and Nedbank Capital of South Africa are co-arrangers.

 The power produced will be bought at a fixed price by Kenya Power (KPLC) over a 20-year period in accordance with the signed Power Purchase Agreement (PPA).  Among the contracts that are in place is a 20-year fixed price Power purchase Agreement (PPA) with Kenya Power and lighting Company, KPLC.  KPLC is the sole distributor of electric power in Kenya.

The World Bank’s commitment is expected later this year the way for the project’s roll-out.  The project is expected to roll later this year. Both the financiers and contractors are confident that the World Bank approval will be granted soon.

Lake Turkana wind Power farm, at full capacity will generate 300MW of wind power, the cheapest power in Kenya. This will be 20 power cent of the total power generated in Kenya for now.  Based in Loiyangalani in Samburu County, the Lake Turkana wind power project includes installation of 385 wind Turbines on a 40,000 hectare piece of land, the associated overhead electric grid collection system and a high voltage substation.  See related story at http://eaers.blogspot.com/2012/01/africas-largest-wind-power-farm-set-to.html

The Project also includes upgrading of the existing 204km road from Laisamis to the wind farm site, as well as an access road network in and around the162Km2 site for construction, operations and maintenance. 
The Kenya Electricity Transmission Company Ltd (Ketraco) is constructing a double circuit 400kv, 428km transmission line to deliver the LTWP electricity to the national grid.  The line will also be used to transport the proposed power import from Ethiopia.

In fact, our investigations established, it is this proposed link from Ethiopia, also funded by the World Bank, which is said to have run into a storm due to the Bank’s social reform agenda, which does not sit well with Ethiopia. It is this reform agenda which, analysts fear, could stall the project.  

The Turkana project, which will cost €582 million, is the largest private sector investment in Kenya’s history. It will engender a lot of benefits to the country in its 20-year life span, company officials say.
Among these is cheap power at US$0.12 cents per Kwh. Further, being a green energy project, Lake Turkana wind power will earn carbon credits at a rate of €10 million a year for a total of€200 million over the life of the project.  The income is to be shared with the government and invested in the community.
It will save the country €120 million a year in fossil fuel imports  as it will cut demand for  fossil fuel used in power generation. Other benefits include tax-revenue estimated at €22.7 million per year or €450 million over the life of the investment.

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