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Home Tech The Biggest Power Energy Project In Africa Has Signed A $870 Million Financing Agreement

The Biggest Power Energy Project In Africa Has Signed A $870 Million Financing Agreement

by Caroline Vutagwa
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wind power

The Lake Turkana Wind Power Project meant to add an existing 300MW of reliable, low cost wind energy to the national grid of Kenya reached a critical milestone following the signing of the financial agreements in Nairobi, Kenya.  

The signing of the over $870m financing agreements represents a major breakthrough to actualizing the biggest clean power energy project in Africa, spanning years of negotiations and fundraising, says Tshepo Mahloele, CEO of Harith General Partners.

 The project will be financed with a mixture of equity, mezzanine debt and senior debt.LTWP has signed a 20 year Power Purchase Agreement with the government of Kenya through its electricity entity, Kenya Power.

The parties at the signing ceremony were represented by lead developer and independent power producer, Aldwych, which is majority owned by the Pan African Infrastructure Development Fund (PAIDF). LTWP is primarily responsible for the financing, construction and operation of the wind farm and comprise a grouping of investors and lenders with extensive financial and technical capabilities and experience on the African continent. They include FMO, Vestas, Finnfund, IFU and a strong local sponsor KP&P on the equity side. The syndicate of banks is led by the African Development Bank and comprises Standard Bank, Nedbank, EIB, DEG and Proparco.  

The project site is situated on the southeast border of Lake Turkana between two high ranging mountains in the Turkana Corridor where a low level jet stream originating in the Indian Ocean creates favourable wind conditions.

The Kenya government will save millions per year on importing fuel.  The LTWP tax contribution to Kenya alone will be approximately $27m annually and $548m over the life of the investment.

This project also forms part of Harith’s commitment to the United States backed Power Plan announced last year by the US President Barack Obama to bring more than 10 000 MW of electricity to sub Saharan Africa. Through Power Africa, Harith has committed $70m for wind energy in Kenya and $500m across the African power sector through a new fund.

Mahloele says the investment is the result of the forward thinking and planning on the part of the Kenyan leadership who had undertaken comprehensive power sector reforms over the past decade.

In Kenya, electricity is mainly generated from hydro, thermal and geothermal sources. Wind generation accounts for less than six megawatts of the installed capacity. Currently, hydro power comprises over 52 percent of the installed capacity in Kenya and is sourced from various stations managed by the Kenya Electricity Generating Company (KenGen).

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