Kenyan taxpayers have been forced to bail out a debt-ridden
Spanish contractor building the Lake ...
Turkana Wind power transmission line to ensure the project is completed by June.
Turkana Wind power transmission line to ensure the project is completed by June.
Energy
Cabinet Secretary Charles Keter said the government has moved in to pay
subcontractors and suppliers owed by Madrid-based Isolux, the firm
which bagged the tender for the 428km high-voltage line in 2011. The
project is yet to be completed.
The deal will see the
government directly pay suppliers and recover the cash later from the
€42.7 million (Sh4.7 billion) balance due to be wired by the Spanish
Government, which is funding construction of the power line.
“We
want to deal with contractors directly and then seek reimbursement from
the Spanish government. An account has been opened at Kenya Commercial
Bank. The bank will issue letters of credit to suppliers to guarantee
timely payments,” Mr Keter said in an interview with the Sunday Nation.
“We want to give comfort to suppliers. We are working to beat the June deadline,” the minister added.
About
Sh1.6 billion is currently owed to suppliers, the minister said. Isolux
was initially expected to complete the power line by the end of 2013.
This
latest twist comes at a time when the government and Lake Turkana Wind
Power Ltd are locked in a tussle over payment of a hefty Sh700 million
monthly fine for the delayed transmission line, which would have seen
electricity from the wind field fed into the national grid.
Isolux
is battling debts that resulted in Fitch Ratings downgrading the
engineering firm’s long-term credit rating to “restricted default”, from
‘C’ short-term default risk.
The total cost of the
Loiyangalani-Suswa power line is €142 million (Sh15.7 billion). The line
will evacuate electricity from the 300-megawatt Lake Turkana Wind
Power, billed Africa’s largest wind farm.
The line is
now 60 per cent done, with a target finish date of June, according to
Kenya Electricity Transmission Company (Ketraco).
The Loiyangalani substation, being constructed by German firm Siemens, is currently 91.5 per cent complete, Ketraco said.
Mr
Keter said the debt and liquidity challenges at Isolux had greatly
affected delivery of the line, which saw the firm miss a revised
completion date of October last year.
“The company has
confirmed that, to date, it has met payments but non-payments are
planned under restructuring plans. Group entities are still operating,
albeit with liquidity and other financial constraints,” Fitch Ratings
said in its latest update on Isolux.
The minister also
cited disputes related to land acquisition for wayleaves as slowing
down the power line project, as landowners on the project’s path dig in
for fat pay cheques.
The Energy ministry, Ketraco and
Kenya Power have disputed the Sh700 million monthly penalty, saying the
wind power farm was yet to table a technical report showing the
project’s output as required in the power purchase agreement (PPA).
“They
do not have a system of confirming what they can generate. The PPA
envisaged them installing a Scada system,” Ketraco chief executive
Fernandes Barasa said in an earlier interview.
Mr Carlo
van Wageningen, a director of Lake Turkana Wind Power, confirmed the
dispute on the online system, technically known as supervisory control
and data acquisition (Scada).
“They have an interpretation of the PPA which is different from ours,” said the project’s founder.
Lake
Turkana Wind Power Ltd slapped the punitive penalty after the
government missed the December 2016 deadline to complete the
transmission line to evacuate the first 50 MW to the grid — to allow the
owners to earn income and service bank loans due in June.
The
final 365th Vestas turbine was erected on March 5, and the company is
now racing to connect all the wind turbines to the substation.
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