Kenya - Key wind power project secured

Kenya has secured a loan of KSh31.4 billion (about Sh533.8billion) to finance the development of the Lake Turukana Wind Power Project. The project which is expected to boost an additional 300MW of wind power into the national grid by 2012 is to be facilitated by the African Development Bank as the mandated lead arranger.

This comes as it emerged that Kenya needs to invest at least KSh35 billion annually in power generation over the next 10 years if the country is to meet its electricity needs as envisioned in Vision 2030. Lake Turkana Wind Power consortium (LTWP), the handler of the project, plans to provide 300 MW of clean power to Kenya's national electricity grid by taking advantage of a wind resource in Northwest Kenya near Lake Turkana. Using the latest wind turbine technology LTWP hopes to provide reliable and continuous clean power to satisfy up to about 30 percent of Kenya's current total installed power.

"The project, which is a low-cost, clean and renewable energy venture, will help diversify Kenya's energy source and substitute diesel-based generation. It is a good demonstration of a PPP co-operation by concurrent development of the transmission line," said Hela Cheikhrouhou, the AfDB's manager, infrastructure division.

African finance officials, power project developers and representatives from global financial institutions agreed that in the current economic environment it was more important than ever for African countries to bring about reforms that make their power sectors more attractive to investment by the private sector.

Gathering in Dakar during the African Development Bank Annual Meeting, participants in the Infrastructure Consortium for Africa's (ICA) Public-Private Infrastructure working group discussed how to maintain private investment flows in the face of the financial crisis.

They noted the challenges to financing infrastructure in the current market environment but emphasized that the sector continues to offer attractive returns. Africa's infrastructure gap is a key constraint on the region's economic growth potential and efforts to reduce poverty.

Africa's power sector alone requires an estimated US$29 billion per year in capital expenditure over the next ten years. Mobilising private investment is crucial if this level of investment is to be achieved.

LTWP will construct a "wind farm" consisting of 353 wind turbines, each with a capacity of 850 KW. The wind power project is expected to start production in June 2011 and reach full production of 300 MW by July 2012.

It will add 30 percent or more to the existing installed capacity in Kenya. Wind turbine technology has seen recent rapid improvement with the development of turbines such as the Vestas V52 that is the design standard selected by LTWP.

The Sh350 billion is to finance generation of an additional 2,000 megawatts of electricity by 2018. Kenya's power generation capacity now stands at 1,345MW against an 8 per cent annual growth rate growing demand rated at 8 per cent per annum.

In an interview Kenya Electricity Generating Company (KenGen) said an additional 2,000MW will meet the country's expected increase in demand for electricity, as it moves to become a middle-income nation.

"All the things we are doing are aimed at adding 2,000MW by 2018,"said KenGen chief executive officer Eddie Njoroge at a press briefing on Tuesday. "If we don't, we will not meet Vision 2030 power target."

To finance the drive, KenGen is preparing to launch an infrastructure bond to borrow money from the public.

The power producer is in the process of raising Sh15 billion in its first bond offer and is currently awaiting Capital Markets Authority approval, which is aimed at increasing its generating capacity by at least 500MW.

KenGen's capacity is currently slightly over 1,000MW making it the largest power producer in the country. Most of the money will be invested in geothermal power generation.

For more information please contact Trevor Sievert at ts@windfair.net