The country’s first major wind energy project has edged closer to tipping point after crucial talks that could see its birth veer into limbo.
Lake Turkana Wind Power (LTWP) cites trail of frustrations spinning around the multi-billion shilling project whose earlier kick-off timetable lapsed three months ago.
LTWP chairman Carlos Van Wagenigen, told The Standard the project is facing unprecedented delays, partly occasioned by World Bank’s request to relook at the contents of the Power Purchase Agreement.
Wagenigen reckons that World Bank’s latest involvement could delay the project. Already, parties involved and financiers have signed the previous agreements and any changes could translate to renegotiation.
“We appreciate interventions by the various agencies, but it can be very frustrating given that World Bank has its own internal, but bureaucratic processes,” explained Wagenigen.
Recently, a flurry of discussions angling around contentious issues in the PPA has been held between various agencies, but an answer is yet to be brokered.
Last week, Wind Power confirmed that the consultative meetings were held with eventual goal of arriving at a speedy conclusion.
Christopher Staubo, founder and Deputy MD at Turkana Wind Power had disclosed that discussions had reached completion stages.
However, owing to the implications of breach of contract, neither the outcome nor signs of the finalisation of the review of PPA appears to be forthcoming soon. According to the chairman, sanctioning of the PPA document was meant to accommodate the WB’s tight conditions after the Government failed to mobilize sufficient funds on its own.
Whilst the Kenya Power has on one hand remained mum on the latest intrigues behind the project, continued delay on the other hand has sent mixed signals that would potentially cost the parties.
The Standard has further established that politics have also reared its ugly head further threatening the project. But Wind Power officials are still confident that the project will kick off soon.
“Some individuals are keen to advance their individualistic interests,” said a source sought to remain anonymous. The source said local leaders have been clandestinely inciting the locals against the project.
Development partners now hope that the project would only kick off when the World Bank puts a nod to the current PPA that is under review without tying it any new conditions.
World Bank requirements normally take into account detailed foreclosures, including guarantors from the party applying for the loan advancements. It is from this background that the Government took a sluggish mode in revealing the guarantors of the project, which has delayed ongoing discussions.
It has also emerged that Finance Ministry is yet to issue letters of comfort, vital financial obligations that gives reassurance to lending party.
Prospect of new conditions by WB might rollback commitments appended in the previous agreements by the consortium.
According to internal sources, the delay has already caused contractors to escalate their contract prices and the financiers who are now fatigued by the deal.
“Definitely if the World Bank comes up with new conditions, the parties would want to change what they had signed earlier and that is frustrating. The threat now is how the banks would react to recommendations by World Bank,” the chairman explained.
Kenya Power signed a 20-year contract with Lake Turkana Wind Power in 2010 amid excitement over the biggest renewable energy project. The energy was to retail at 7.52 euro cents per kilowatt. It remains to be seen as to whether the project would ever take off.
|Wind Watch relies entirely
on User Funding