CLARIFICATION

Turkana Wind defends 15.5 billion payment by Kenya

It stated that the charge was slapped on Kenya over delayed Suswa power evacuation line

In Summary
  • The firm has a 20-year power purchase deal with Kenya
  • The Lake Turkana project comprises 365 wind turbine generators with a maximum generating capacity of 850kW each
The Lake Turkana Wind Power Project in Loyangalani, Marsabit County.
The Lake Turkana Wind Power Project in Loyangalani, Marsabit County.
Image: JACK OWUOR

Lake Turkana Wind  Power has said that the Deemed Generated Energy (DGE) payment by the Kenyan government was nothing out of ordinary.

Speaking during a media roundtable yesterday, LTWP chief executive Phylip Leferink said DGE is a common practice in renewable energy deals, especially for wind and solar.

"We have a 20-year power purchase deal with the Kenyan government. We came to a financial close in September 2017 but the government delayed its obligation. That is where GDE emanated from,'' Leferink said.

The government was supposed to complete the construction of a 428-kilometre power transmission line to connect energy generated by LTWP to the national grid but this was delayed by a year.

''This technically rendered our energy idle yet part of the €450 million (Sh54.9 billion) we had borrowed from our financiers was due. We thank the government that it managed to wire us €46 million (Sh5.6 billion),'' Leferink said. 

He added that together with the Kenyan government, they arrived at a €127 million compensation for the year-long delay.

Even so, after commercial production the following year, they noticed that they had over quoted the refund by €6.1 million (Sh744 million) which LTWP wired to the National Treasury.

Early this year, there was controversy over the refund that was rejected by Standard Chartered Bank, which cited a lack of sufficient documentation. 

The lender rejected the refund for excess payment of idle power charges paid in 2018, citing a lack of sufficient details of the ultimate beneficiary of the millions of shillings paid to the National Treasury account.

It also demanded supporting documents for the payment amid increased oversight by German financial regulator BaFin for money laundering breaches.

"The money bounced twice for lack of proper transfer details. It had nothing to do with illicit financial flows,'' Leferink told journalists.

The refunded amount of Sh785 million finally hit the exchequer's account in March this year after two years of back-and-forth. 

Meanwhile, Kenya has repaid more than half of the deemed generated energy debt owed to LTK and is expected to clear the balance by May 2024. 

Yesterday, the firm confirmed that at least €40 million of the €75 million owed has been paid through a tariff hike of €0.08 cent/Kwh and the remaining balance will be cleared by May 2024.

''We are supposed to charge €8.4 cent/Kwh but with the DGE, it is at €9.2 cent/Kwh. We hope to revert to the original tariff in the next two years, among the lowest in the market,'' Leferink said. 

The Lake Turkana project comprises 365 wind turbine generators with a maximum generating capacity of 850kW each for a total installed capacity of 310.25MW.

This accounts for 17 per cent of Kenya's total installed power. 

He added the charge was necessary to enable the firm to repay due loans since the facility was idle, awaiting the completion of the 428-kilometer Suswa power transmission line a year later by the government.