Mr. Speaker Sir, Pursuant to Standing Order 47 (1) I rise to make a statement on a matter of national importance and general concern regarding Power Purchase Agreement (PPA) between Lake Turkana Wind Power Company Ltd and the Government of Kenya.

On September 29, 2011, Kenya Power Limited Company (KPLC) entered a power purchase agreement with a company known as Lake Turkana Wind Power Company Ltd.

The company was to finance, design, procure, construct, install, test, commission, operate and maintain the generation plant in accordance with terms and conditions set out in the power Purchase Agreement (PPA).

Other scope of works included the supply and installation of the main metering equipment and back-up metering equipment, transfer the back-up metering equipment of Kenya Power Limited and sell the net electrical output to Kenya Power Limited Company. The power plant is in Loyangalani, Marsabit County.

Mr. Speaker Sir,

The contracting company, Lake Turkana Wind Power Company Ltd contracted to generate 300MW of wind power and supply the same to the national grid.

According to records available, the cost to the project was Sh640 million Euros or Sh74.24 billion. The construction period was estimated at between 26 and 36 months when the company would supply the generated power to the national grid.

Mr. Speaker Sir,

This plan project was right from the start faced with several questions from many quarters, among them, the decline by the World Bank to offer Partial Risk Guarantees.

The World Bank (IDA – International Development Association) withdrew its’ support of the project with a clear explanation that the project was too big and that KPLC lacked the necessary and proven expertise in managing such huge volume of wind energy.

This notwithstanding, the Government of Kenya went ahead and launched the project in 2015. The completion date was set for January 2017, and Lake Turkana Wind Power say they have in fact completed the project.

Mr. Speaker Sir,

The Ministry of Energy has a policy document known as Feed-in-Tariffs on Wind, Biomass, Small-Hydro, Geothermal, Biogas and Solar Resource Generated Electricity. This policy document was issued in March 2008, revised in 2010 and again revised in 2012. This policy document sets out connection obligations as follows:

          “The Feed-in-Tariffs values set in this policy include a standard allowance          for interconnection costs. The cost of interconnection, including the costs of     construction, upgrading of transmission/ distribution lines, substations, and          associated equipment, are to be borne by the developer.

          The interconnection costs will be paid by the developer upfront……, where          the off-taker construct or upgrade its grid, the costs shall be recovered from          the seller through the Feed-in-tariff”.

Mr. Speaker Sir, in this particular case the Lake Turkana Wind Power Ltd, the Government abandoned its above stated policy and syndicated a loan from the Spanish Government of Kshs.17 billion plus a government of Kenya contribution of Kshs. 3 billion for its parastatal known as KETRACO to construct the line. There is no evidence that any arrangement is in place to recover this construction cost from Lake Turkana Wind Power Company Ltd.

Mr. Speaker Sir,

As I make this important statement, it has been established that a trial run has shown that the company at its most optimum production will manage to produce between 40 - 60% of its installed capacity.

Yet Mr. Speaker, because of the delayed commissioning of the facility, Lake Turkana Wind Power Company Ltd has laid a claim to the Government of Kenya for payment of “deemed generated power at 100%” capacity.

Already a staggering sum of Sh 5.7 billion has been paid to the Lake Turkana Wind Power Company Ltd; and the company is demanding a further Sh 9.6 billion for the same “deemed generated power”.

Mr. Speaker Sir,

On what basis is the Government of Kenya making the astronomical payments to the Lake Turkana Wind Power Company Ltd without the supply of single megawatt of electricity, when in fact the same Government of Kenya should be demanding reimbursement/ recovery costs in relation to the Spanish loan and its contribution (Sh20 billion) for the construction of the transmission line?

Mr. Speaker Sir,

The Government of Kenya should explain to the Kenyan taxpayers the total amount of money it intends to pay to the Lake Turkana Wind Power Company Ltd on the so-called “deemed generated electricity” and how much power will be fed in the grid by the company, and how the same will impact on the cost of electricity to the consumer.

The Government should equally explain to Kenyans why it abandoned its own policy on connectivity construction and burdened Kenyans with yet another loan from Spain for constructing the connectivity line.

Mr. Speaker Sir, the Standing Committee on Energy should investigate this case of Lake Turkana Wind Power Company Ltd and all the contracts and costs and obligations created therein and recommend the recovery of any tax payers’ money that may have been erroneously and unjustifiably paid to the company and hold those responsible for the unjustified payment that has occasioned financial loss to the country to account.

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Deputy Speaker Prof Kithure Kindiki directed that the report of the Energy Committee headed by Nyeri Senator Eng Ephraim Maina (who attempted to defend the project but was thwarted) will be required to table the report on February 11, 2019

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