The Lake Turkana Wind Power (LTWP) firm has set a target to break even in 2024, about 10 years since the start of the project. This is according to the firm’s Executive director Rizwan Fazal.
Rizwan Fazal pointed out that the project, which began supplying electricity to Kenya Power in September 2018, shall take one decade to break even because of the kind of work that had to be done before power evacuation started.
“We have to wait. Mega projects are designed for a long period of time, it is impossible to build and start getting your money back just immediately after commissioning. We need a long term horizon, which is five more years.” said Mr. Rizwan Fazal.
LTWP will trade the energy at US $9.64 per kilowatt hour (kWh) for the first six years and then shift to US $8.69 per kWh. This is meant to recover US $92m balance as penalty on government for delaying construction of the transmission line.
The project was built through a complex financing arrangement where out of the total project cost of US $71m and US $54m was sourced from a consortium of senior and subordinated lenders.
The debt will be paid twice every year – in March and September – and the last payment shall be made in 2024 according to Rizwan Fazal. This amounts to approximately US $85m) repayment per annum.
Mr. Fazal also said that they signed a 15-year service agreement with Danish firm, called Vestas. The agreement mandates the latter to design, manufacture, install, and service wind turbines and this shall cost 18% of LTWP total yield.
“The remaining amount of the turnover, after debt repayment and rewarding Vestas, shall be used to pay 500 personnel, maintaining 208 kilometers of road, and undertaking community projects” he concluded.
There is a possibility of the firm renegotiating with Kenya Power to extend the PPA if necessary after the technology becomes obsolete.