By VICTOR JUMA, Source: Business Daily
Norwegian State-owned investment company Norfund has written off its Sh1 billion investment in Kinangop Wind Park project which was cancelled in 2016 after protests from local communities.
The institutional investor had acquired a 19 percent stake in the venture in 2013, joining a group of shareholders and lenders who backed the project that was to have a generation capacity of 60.8 megawatts (MW).
Old Mutual and Macquarie Group were the company’s major shareholders and they are expected to have booked losses of about Sh4.2 billion assuming they have also written off their capital.
“Unfortunately, the Kinangop Wind Park project had a negative effect on the returns as values were set to zero on December 31, 2018 when the operation was shut down,” Norfund said in its investment disclosures.
Following the project’s collapse, Stanbic Bank appointed PricewaterhouseCoopers (PwC) as receiver managers. The Kenyan bank had teamed up with its South African parent company Standard Bank to fund the venture.
PwC is currently in the process of selling the wind turbines that had been bought, with the priority being the settlement of debt.
The project was to cost a total of $150 million (Sh15.5 billion). The process of selling the wind turbines and other items has dragged on because of the unique nature of the assets. Only firms interested in expanding or putting up new wind farms are likely to buy the devices.
Lake Turkana Wind Power is the biggest producer of electricity from wind in the country with a capacity of 310MW.
State-owned KenGen also runs wind farms in Ngong Hills and plans to add more such plant in the same area and other locations including Meru.
The Kinangop wind farm was abandoned after disputes with locals over compensation for land and other concerns.
The residents conducted protests, fearing they would be forced to sell their land while other said the turbines would cause harm their health.
This resulted in delays that saw funds provided by the lenders used up before the project was completed. Shareholders, on the other hand, balked at pumping extra capital into the venture.
The project sponsors had sued the government seeking compensation but their case was dismissed by the International Court of Arbitration which said the protests did not amount to a political event.