UK firm to acquire 31pc stake in Lake Turkana Wind Power
Tuesday March 14 2023
A United Kingdom firm is set to acquire a 31.25 percent stake in Lake Turkana Wind Power (LTWP) Limited, which built the €630 million (Sh87.6 billion) wind farm through debt and equity.
LTWP says it will, in the next 15 days, make a formal application to the Energy and Petroleum Regulatory Authority (Epra) to be allowed to sell the stake to CFP UK Holdings Limited, a company incorporated in England and Wales.
The wind farm has not disclosed the size of the deal that is coming ahead of 2024—the year the company estimates it will have fully recouped its investment in the project, according to earlier approximations.
“Subject to the relevant regulatory approvals being obtained and other various condition precedents being satisfied in relation to the proposed transaction, CFP intends to partner with the existing shareholders of the Company to ensure the success of the 310MW wind-powered electricity generation plant,” read the LTWP notice.
LTWP is currently owned by six shareholders, including Anergi Turkana Investments Limited and KP&P Africa B.V, a Dutch company.
Other shareholders include Danish Climate Fund through Investment Fund for Developing Countries, Vestas Eastern Africa Limited, Finnish Fund for Industrial Cooperation and Sandpiper Limited.
The project was built through a complex financing arrangement comprising a debt and equity mix. Out of a total project cost of Sh87.6 billion, debt comprises Sh66 billion (€475 million), sourced from a consortium of senior and subordinated lenders.
LTWP has been paying the debt twice yearly — in March and September— with the last payment expected in 2024. This amounts to about €75 million (Sh10.4 billion) in repayment per year.
The project also signed a 15-year service agreement with Danish firm, Vestas, to design, manufacture, install, and service wind turbines. The firm takes about 18 percent of LTWP turnover, according to details given earlier.
According to information on the LTWP website, the technology will likely become obsolete after that, and it may need to open negotiations with Kenya Power to extend the power purchase agreement, if necessary.
LTWP, with a capacity of 310 megawatts — enough to power up to one million homes, entered into a power purchase agreement (PPA) with Kenya Power in 2009.
The company agreed to be selling the energy to the power distributor at 8.529 euro cents (Sh11.86) per kilowatt hour (kWh) for the first six years and then start charging at 7.684 euro cents (Sh10.69) per kWh.
The difference in tariff is to recover €81 million (Sh11.3 billion) balance as a penalty on government for delaying construction of the transmission line.
Read: Idle Turkana wind power costs taxpayers Sh18bn