March 24, 2014 / 3:05 PM / in 4 years

Kenya's wind power project secures funds to start construction

* Project has been delayed due to financing problems
    * Wind farm would be the biggest of its kind in Africa
    * Plant would boost power supply at reduced cost

    By George Obulutsa
    NAIROBI, March 24 (Reuters) - Construction of Kenya's Lake
Turkana Wind Power project, which has been delayed by financing
difficulties, should begin by June after it secured 498 million
euros ($686 million) in funding, officials said on Monday.
    The project and its financiers signed agreements for the
sum, paving the way for the start of the 623 million euro
project, the largest single wind power scheme in Africa,
building of which had previously been scheduled for the first
quarter of 2014.
    The wind farm will have a capacity of 300 megawatts (MW) and
will help to plug a power supply shortfall which, coupled with
an ageing grid, has led to frequent blackouts that hamper
industry and anger residents in east Africa's biggest economy.
    A Kenyan official said a 428-km transmission line would be
built to transport the electricity from the wind plant, which
had initially been due to start generating power in June 2011.
    "Let's say by June we hope to have completed all the
conditions precedent, and then we can put the spade in the
ground. What is very important is that the transmission line
starts before us," Carlo Van Wageningen, chairman of Lake
Turkana Wind, said by telephone.
    Denmark's Vestas Wind Systems will supply some 365
wind turbines at the site in the north west of the country.
    While the 498 million euros of funding is debt, the
remainder will be contributed as cash by all the partners in the
form of equity, he said. 
    "Once constructed, Lake Turkana Wind Power will be the
largest single wind power project in Africa. It is to date the
largest single private investment in the history of Kenya,"   
Wageningen said earlier at a signing ceremony.
    The project expects to produce an initial 100 MW in 2016,
with the remainder expected to be in the grid within 32 months
of that, Van Wageningen said.
    About half of the country's electricity is produced from
hydro sources, and the rest from geothermal - using steam from
below the earth's surface - or diesel.
    The wind power scheme could save Kenya up to $150 million
annually in money used to import fuel for thermal power
generation, Lake Turkana Wind Power estimates.
    The project will bring on line 20 percent of Kenya's
installed capacity at a 9 Kenyan shillings ($0.10) per kilowatt
hour, thus contributing to the government's push to lower
electricity costs.
    The government said last year it aimed to halve the cost of
electricity within three to four years from between 17 and 18
U.S. cents, mainly by replacing diesel generation, which he said
costs about 35 shillings (41 U.S. cents) per kilowatt hour.
    Kenya generates 1,664 MW of electricity and is working on
expanding its power supply by adding 5,000 MW by 2017, with the
goal of boosting growth. 
    The economy, projected to grow by about 5 percent this year,
is expected to push power demand up to 15,000 MW by 2030.
    The Lake Turkana Wind Power consortium comprises KP&P Africa
B.V. and Aldwych International as co-developers, Industrial Fund
for Developing Countries, Vestas, Finnish Fund for Industrial
Cooperation Ltd, and Norwegian Investment Fund for Developing
   ($1 = 86.5500 Kenyan Shillings)
   ($1 = 0.7256 Euros)

 (Editing by James Macharia; Editing by Anthony Barker)

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