General Electric is today set to get a licence to develop a wind power farm in Kinangop, paving the way for the start of construction of the 61 mega watts project.
The Energy Regulatory Commission (ERC) is set to issue the licence for the Sh12.7 billion ($150 million) project to be developed jointly by GE and Aeolus Kenya.
It is expected to feed power to the national grid by mid 2015.
ERC acting director-general Fredrick Nyang said that in addition to issuing the power generation licence, the regulator had also approved the power purchase agreement for the project.
“With the approval of the PPA and the issuance of licence, they are expected to start construction within the next one year.
‘‘The PPA approvals are what they use in finalising their debt and financing arrangements,” said Dr Nyang in an interview.
He said that in addition to licensing the project developers, ERC had also issued a licence to Ketraco for construction of power lines to transmit electricity from the project to the national grid.
The project will be a boost to Kenya’s plans for tapping renewable energy to raise capacity beyond the current total of 1,600 MW.
Spanish firm Iberdrola Engineering announced last month that it had signed an agreement worth Sh9.7 billion (€85 million) for the construction of the Kinangop wind farm.
According to the Iberdrola statement, the project will be owned by the Macquarie and Old Mutual sponsored African Infrastructure Investment Fund II and the Norwegian Investment Fund for Developing Countries (Norfund), with South African Standard Bank acting as Mandated Lead Arranger for the deal.
“The Iberdrola subsidiary will handle engineering, procurement, construction and commissioning. The project will have a total of 38 wind turbines manufactured by General Electric.
‘‘The hubs for each 1.6MW wind turbine will stand almost 80 metres and have a rotor diameter spanning 82.5 metres,” said Iberdrola.
As the lead financial arranger for the project, Standard Bank Group (and its subsidiary CfC Stanbic Bank) announced on October 3 that it had underwritten a Sh7.65 billion ($90 million) debt deal with Aeolus Kenya.
According to Kwame Parker, Standard Bank Group’s East Africa Head of Debt Solutions and Infrastructure Finance, the transaction will be fully funded through a combination of debt and equity.
In addition to Standard Bank’s $90 million debt deal, two international partners in the deal, likely Norway’s Norfund and GE, are expected to provide $60 million (Sh5.1 billion) in the form of equity funding.
GE is likely to contribute a maximum of Sh3.5 billion for financing the project in line with its current policy of contributing between Sh1.7 billion ($20 million) and Sh3.5 billion ($40 million) for power ventures in Kenya.
GE’s plan is to take up equity or shareholding of between five and 10 per cent in similar power projects in the region.
The company is also participating in the Sh14 billion ($160 million) Kipeto wind project in Ngong, slated to produce 100MW.
GE expects to take up equity of about $16 billion or 10 per cent of the total worth of the project.
By Charles Mwaniki
Source: Business Daily Kenya