Kenya’s attempt to thwart public debt could impede its efforts to increase its electricity generation capacity, forcing investors to look elsewhere. The government said that it would connect energy investors with the World Bank and IMF in order to gain access to capital.
The country’s Finance Minister Uhuru Kenyatta said that the Treasury would not grant guarantees on funding, although in mid-September it asked the European Union to set up an insurance fund to entice investors to venture into the African energy market. Investors will be forced to get help from risk underwriters, but projects already underway like the Lake Turkana Wind Project could take a hit.
Alternative Energy Africa reported on September 13 that Kenya had approved guarantees for the wind farm with Energy Permanent Secretary Patrick Nyoike saying that the project would have letters of credit for six months totaling around $54.2 million. Investors in Lake Turkana’s wind project have received financing from the African Development Bank, Standard Bank, and Nedbank, but it needs more. The Lake Turkana consortium chairman Carlo van Wageningen said that as a result of the government’s policy reversal, it would likely renegotiate the power purchase agreement (PPA) with power distributor Kenya Power and Lighting Co. (KPLC).
Now it is likely that the project, anticipated to generate 300-MW into Kenya’s national grid, will be delayed another year. And it is probable that the Lake Turkana wind farm will not be the only project to feel the burn from the government’s withdrawal.
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