China firm wins Sh22.6bn tender to build Kipeto wind power plant

Money Markets

KenGen’s Ngong wind power farm in Kajiado County. Wind energy is becoming a key energy source, with a number of power plants in the pipeline. PHOTO | FILE 

By JOHN GACHIRI, jgachir@ke.nationmedia.com

In Summary

• China Machinery Engineering Corporation clinched the Sh22.6 billion contract for the engineering design, procurement and construction of the 100MW wind farm.
• The Kipeto wind power plant will be completed within two years from the date of commissioning which was not disclosed.

Kipeto Energy’s Kajiado-based wind-power project has gathered pace after it awarded a Chinese firm the multi-billion contract to construct the plant.

China Machinery Engineering Corporation clinched the Sh22.6 billion contract for the engineering design, procurement and construction (EPC) of the wind farm that is set to generate 100 megawatts (MW).

The project, one of the largest US foreign direct investments in Kenya, will be completed within two years from the date of commissioning which was not disclosed.

“The company, as the EPC general contractor, will be responsible for the design, supply, civil engineering and construction, installation, training, commissioning, technical services and other works of the Project on a turnkey basis. The contract value amounts to $221 million (Sh22.6 billion),” said the firm in regulatory filings.

“As stipulated in the contract, the project construction will commence upon the satisfaction of certain conditions precedent. The construction period of the project will last approximately 22.5 months once the construction is commenced.”

China Machinery Engineering Corporation is a construction and engineering firm listed on the Hong Kong Stock Exchange.

Ground work for the project has been going on, with the company already having signed a 20-year power purchase agreement with electricity distributer Kenya Power for an undisclosed amount in 2015.

Kipeto Power also entered into an agreement with US conglomerate GE in July last year for supply of 60 GE 1.7-103 wind turbines at the Oldonyo-based site.

READ: Kenya Power signs 100MW wind energy purchase deal with US firm

The Overseas Private Investment Corporation (OPIC), the US government’s development finance arm, is providing debt financing of $233 million (Sh24 billion).

The African Infrastructure Investment Fund II is the largest project shareholder with a 55 per cent stake, followed by Craftskills Wind Energy International Ltd and IFC, which have a 20 per cent stake each with the Kipeto Local Community Trust owning the remaining five per cent stake in the project.

Wind energy is emerging as a key energy source, with a number of power plants in the pipeline. Lake Turkana Wind Project, which is the largest wind plant in Africa and currently under construction, will produce 310 MW when completed in June 2017.

KenGen is also scaling up wind production which it expects to account for up to six per cent of its energy mix by 2020, up from the current two per cent.

A coverage report by Exotix says the listed power generator will produce 140MW , of the projected 2,363MW that KenGen is projected to produce, from wind.

KenGen produces 26MW of wind energy at its Ngong-based site but it is looking at the possibility of additional power from wind and geothermal sources.