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Lake Turkana Wind Power Project (LTWP) marked a significant milestone on Monday, March 24 with the loan signing of €623 million (Ksh 76 billion), making it the largest private investment in Kenya’s history.
African Development Bank Regional Director for the East Africa Regional Resource Center, Gabriel Negatu, stated, “This is Kenya’s largest private sector investment since independence. As the lead arrangers, we are proud to have played the key role of convening all the partners together to reach this historic financial close. African Development Bank has further provided a Partial Risk Guarantee to the Government of Kenya to protect the project against the risk of delays in the construction of the transmission line, thereby providing additional comfort to prospective lenders.”
Potentially Africa’s largest single wind power project to be constructed, Lake Turkana has attracted financial support from the European Investment Bank (EIB), the Standard Bank of South Africa, Nedbank, Netherlands Development Finance Company (FMO), Proparco, East African Development Bank (EADB), PTA Bank, EKF, Triodos and DEG; all of whom were led by the African Development Bank (AfDB).
The signing of the financing agreements signifies the completion of the project’s financing subject to completing the remaining conditions precedent, after which construction will commence this year. The Lake Turkana project will begin producing power in early 2016, adding 300 MW to the national power grid.
LTWP is a key deliverable under the Kenyan Government’s commitment to scaling up electricity generation to 5,000 MW and to provide cost-effective renewable power to the Kenyan consumer. This project alone will produce approximately 20% of Kenya’s currently installed capacity at €7.52 cents/kWh (Ksh9/kWh). It is also a Vision 2030 flagship project and will be transformative in terms of the development impact in the northern arid areas of Kenya, to the Kenya’s electricity sector, and to the country as a whole. It is also expected to generate up to US $150 million annually in foreign currency savings to Kenya through fuel displacement costs.
The project’s debt raising is led by the AfDB, as mandated lead arranger, the Standard Bank of South Africa and Nedbank Limited as co-arrangers, EIB, FMO, Proparco, East African Development Bank, PTA Bank, EKF, Triodos and DEG. The Government of the Netherlands has also provided a grant of €10 million and the European Union a further €25 million, through the EU Africa Infrastructure Trust Fund.
The LTWP consortium is comprised of KP&P Africa B.V. and Aldwych International as co-developers and investors; and Finnish Fund for Industrial Cooperation Ltd. (Finnfund), Industrial Fund for Developing Countries (IFU), Wind Power A.S. (Vestas), Norwegian Investment Fund for Developing Countries (Norfund), and Sandpiper as investors. Aldwych will also oversee construction and operations of the project on behalf of LTWP.