The Standard Group Plc is a multi-media organization with investments in media platforms spanning newspaper print operations, television, radio broadcasting, digital and online services. The Standard Group is recognized as a leading multi-media house in Kenya with a key influence in matters of national and international interest.

Standard Group Plc HQ Office,
The Standard Group Center,Mombasa Road.
P.O Box 30080-00100,Nairobi, Kenya.
Telephone number: 0203222111, 0719012111
Email: [email protected]

NEWS & CURRENT AFFAIRS

The Nairobian

Investors pull out of Sh15b energy project over disputes with locals

Business

By Frankline Sunday | Feb 23, 2016

Residents of Magumu, Kinangop in Nyandarua County protest recently against the 61MW wind power project in the area.

Kenya’s Sh15 billion Kinangop Wind Park energy project has collapsed, following disputes between area residents and investors.

This has renewed concerns over the administration of private-public partnerships in the country.

The Vision 2030 flagship project fell through after the investors, led by Norwegian private equity firm Norfund, yesterday announced they are pulling out and would no longer be backing the construction of the 60MW wind farm.

The Impact

“The impact of the initial civil commotion has not been resolved, while further incidents of civil commotion have occurred, creating an unsafe environment for the team to implement the project,” said James Wakaba, the CEO of the project.

Keep Reading business

“Furthermore, due to the consequent material delay, project funds have been depleted and the project can no longer be completed by the shareholders.”

The project managers added that serious security events, the most recent recorded in the last two weeks, had prompted the investors to pull their support.

The Kinangop Wind Park was conceptualised in 2004, and was to see the construction of 38 wind turbines on the Kinangop plateau. Each would have the capacity to generate 1.6 MW and an expected lifespan of 20 years.

However, land disputes and allegations of sabotage and exploitation have slowed down development and dragged the process, with a crucial lawsuit on the matter set for determination on March 31.

In 2011, American conglomerate General Electric won the bid to supply the 38 turbines and provide maintenance for 10 years through a service agreement with the Kinangop Wind Park valued at $58 million (Sh5.9 billion at current exchange rates).

Norfund is also said to have invested over Sh1 billion in the project in the years running up to the project’s stalling last year.

Other firms that are cutting their losses from the collapsed deal include Kenya Power, which had signed a power purchase deal at Sh12 per kilowatt hour.

Financial providers Old Mutual Investment Group and Macquarie, through their partnership African Infrastructure Investment Fund 2 (AIIF2), in 2011 announced they had reached $500 million (Sh50.8 billion) in total commitments.

The project had an anticipated completion date of July last year and was underwritten by CfC Stanbic Bank.

According to Mr Wakaba, the project has used up about Sh10 billion so far, and the impasse has dealt a big blow to not only the investors, but also energy investment in the country.

“Everybody has lost out of this stalemate — the Government, investors, banks, land owners and consumers who would have used the energy,” he said.

The collapse of the project further affects the Jubilee government’s commitment to add 5,000MW of installed energy capacity by next year. The bulk of this new energy infrastructure was expected to come from wind and geothermal sources.