The government can breathe a sigh of relief after a British
Virgin Islands-registered power company was stopped from demanding Sh31
billion, following unforeseen factors that frustrated implementation of a
wind power project in Kinangop, Nyandarua County.
An
international arbitral tribunal — the International Court of Arbitration
in London has dismissed a claim against the government by Kinangop Wind
Park Limited (KWP), bringing to an end a dispute that has been
litigated in both Kenyan and foreign courts.
The
tribunal has ruled that political interference did not frustrate the
project, and as such, the government of Kenya cannot be held liable to
compensate KWP.
“It is our finding that there was no
political event within the meaning of the Letter of Support, which would
have required the government to compensate KWP. Consequently, the claim
by KWP is dismissed,” ruled the tribunal.
Implementation of the controversial wind power project started
in 2013. As part of the strategy to fully achieving the Kenya Vision
2030, the government has planned to increase the electricity power
generation from the 1,664 Megawatts (MW), as of September 2013, by an
additional 5,000MW to accommodate the ever-rising demand for both
domestic and industrial consumption.
As such, the Kenya
Power company Ltd entered into agreements with various investors for
engineer-procure-construct (EPC) projects that would generate additional
power to be channelled to the main grid.
KWP Ltd and
PricewaterhouseCoopers Ltd (PwC), entered into a power purchase
agreement on March 26, 2013, with Kenya Power in respect of a 60MW wind
farm that the KWP Ltd and PwC Ltd intended to establish in Kinangop.
As
a demonstration of goodwill and approval of the project, the government
gave PwC Ltd a letter of support dated July 26, 2013, in respect of the
implementation in which the government undertook to indemnify the
investor in the event of the occurrence of political events.
Some
landowners in Kinangop voluntarily leased 1,600 square meters of their
respective parcels of land to KWP Leases Ltd, a subsidiary of KWP Ltd,
for purposes of construction of the Wind Turbines on their farms, in
exchange for lease payments by KWP Ltd, in the implementation of the
project.
However, an environmental dispute arose
between KWP Ltd and other farmers, whose land parcels surrounded the
sites intended for the erection of the masts.
The
aggrieved farmers filed a petition at the High Court in Nakuru which
delivered a judgment in March 2016, in which Justice Munyao Sila said
the variation of the environmental impact assessment (EIA) licences
issued, upgrading the project to 60MW and later to 61MW project on new
sites situated in 38 plots without requiring a fresh EIA to be provided
was contrary to the law.
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