Energy Ministry officials last year found themselves in a tight spot as Lake Turkana Wind Power (LTWP) came calling.
The firm had come to collect Sh5.7 billion penalty fee after the Government’s failed to live up to its promissory contract. The State had failed to meet its end of the bargain in putting up electricity transmission infrastructure from Marsabit to Suswa. The demand for payment was in line with an agreement that the firm had signed with the Government before it started building its wind farm in Marsabit County.
The project guaranteed payment from the Government should the company be unable to monetise its investment due to such factors as the lack of a power line to evacuate power to the national electricity grid. The firm had completed the construction of the plant in December 2016 and was ready to start generating about 100 megawatts (MW), about a third of the plant’s installed capacity of 310MW, with the balance expected to come on board mid-2017.
The transmission line was by then far from being finished owing to various factors, including complex land acquisition process and the financial challenges that the Spanish contractor Isolux Corsan experienced that led to its filing for bankruptcy in August 2017. The line, like the plant, was scheduled for completion in December 2016.
As per the agreement, the firm would have pocketed Sh1 billion monthly from January last year until the completion of the line to compensate it for lack of power transmission infrastructure that denied it an opportunity to start selling electricity to Kenya Power.
It was, however, paid Sh5.7 billion as penalty after negotiations with the Ministry of Energy. As part of the negotiation, a new deadline for line completion was set for August this year and failure would again see taxpayers exposed to another Sh1 billion monthly penalty. Fast forward to August 31 this year and after missing many other deadlines to complete the line, the Kenya Electricity Transmission Company (Ketraco) delivered the line.
[BUSINESS] Payback time: Wind power firm faces fine for delayed supplies: Energy Ministry officials last year found themselves in a tight spot as Lake Turkana Wind Power (LTWP) came calling. https://t.co/QI2i7j6hcj
— Breaking News (@News_Kenya) October 2, 2018