18 May 2018

Kenya: Turkana Power Line Halt Signals High Bills

A Nyandarua farmer has obtained court orders stopping construction of the electricity transmission line linking Lake Turkana wind farm to the national grid in a move that could cost consumers billions of shillings in additional penalties payable to the power producer.

The flower farm, Afriscan (Kenya Limited), says construction of the line cannot continue until it is paid a Sh2.7 billion compensation for the planned acquisition of its land for purposes of building the line.

Afriscan argues that construction of the powerline across its farm has destroyed matured flowers, an irrigation system and other assets grounding its operations.

This means that Power China Guizhou Engineering Company, which won the tender to complete the line, has to suspend the work in that section of the line until the court issues fresh orders.

Construction of the powerline, which started in November 2015, is way behind schedule, having been delayed by land compensation demands and last year's termination of the Isolux contract.

The delay has seen the wind power producer claim billions of shillings in fines that were built in the contract - a cost that has been passed on to taxpayers.

Homes and businesses will from September incur a penalty of Sh1 billion in monthly electricity bills after Kenya's failure to connect Lake Turkana Wind Power to the grid.

Delays in construction of the 428-kilometre power line have hampered electricity evacuation from the northern town of Marsabit to Suswa substation in Narok, the country's main interchange for power coming from different sources.

This has left the wind farm developers stranded with power since last year amid pressing cash needs such as loans repayment, an obligation that taxpayers will shoulder.

The Treasury wired Sh5.7 billion to Lake Turkana last September and the fine will be recovered this year from consumers via monthly bills.

"This application is hereby certified urgent and should be served upon the respondent within seven days for inter parties hearing on May 23, 2018," Justice Mary Oundo said even as she ordered that the status quo be maintained.

The flower farm is seeking Sh1.16 billion compensation for destroyed crops and lost earnings since February last year and Sh1.6 billion to cover the infrastructure.

Kenya Electricity Transmission Company (Ketraco) and the Chinese contractor are listed as respondents.

Benjamin Mwangi, the proprietor of the flower farm, says in court documents that Ketraco has engaged him in cat and mouse games, shifting goal posts even as the flowers are wasting away exposing him to huge losses.

Afriscan claims that it entered an agreement with Ketraco in February 2015 to allow the power lines pass through the farm subject to prompt compensation. But no compensation has been forthcoming even as his crops are destroyed, his high voltage lighting system destroyed further increasing his losses.

Mr Mwangi says Ketraco has refused to pay him even after it forcibly entered the farm in February 2017 to begin construction work.

The flower firm also accuses the Agriculture and Food Authority of attempting to defraud it off its assets by omitting the infrastructure aspect from the report it submitted to Ketraco in February 2018.

The firm says it has taken a number of loans to develop the farm and that it is facing heavy losses due to default.

Further, Afriscan has produced agreements signed with international firms on delivery of fresh flowers, it says could expose it to claims running into billions for breach of contract.

The flower firm says an agricultural extension officer submitted to Ketraco an assessment of the damage at only Sh11.7 million in April 2017, which it rejected.

The extension officer in May 2017 presented another assessment of Sh729 million, which the flower firm says Ketraco never disclosed to it.

In February 2018, FAA presented to Ketraco a fresh assessment report of Sh757 million that covered crop damages, but excluded infrastructure.

Afriscan says it gave Ketraco an offer of Sh447 million as an advance compensation, which the state firm allegedly ignored.

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