Kenyans are shouldering Sh24 billion debt through their electricity bills after the Kenya Transmission Company (Ketraco) failed to complete the transmission line in time.
The revelations emerged during the grilling of the top managers of the Lake Turkana Wind Power in the ongoing probe on the high cost of electricity by the Senate Energy Committee.
This emerged during the probe into the high cost of power when Lake Turkana Wind Power appeared before the Senate Energy Committee.
The firm’s managers told the pane that the cost was increased to Sh24.7 billion to insulate the company from defaulting on the loan repayment to the lenders.
The lenders had bankrolled the company to set up the plant.
The initial cost of the project was Sh21 billion (EUR 142.5 million) but the amount was adjusted to Sh24.7 billion (EUR 167 million) to compensate for the delay in the construction of the transmission line.
The debt has been factored into the tariff charged to the consumers.
LTWP project is a purely commercial project financed with a total of Sh80 billion, which took seven years to develop before it could reach financial close and commenced construction in 2014.
The firm is one of the independent power producers accused of selling power to Kenya power at high prices which are then passed to the consumer.
LTWP produces between 180 and 190 megawatts of power per day, translating to about 20 per cent of the total county’s consumption.
However, the Senators sought to know why LTWP commenced the project before the issue of the transition line was completed.
Narok senator Ledama ole Kina asked for a forensic audit on the engagements between Kenya Power and Lighting Company and LTWP to establish the levels of corruption.
“We must conduct a forensic audit and investigations and find out if there is anyone who failed in their role leading to this,” said Ole Kina.
On his part, Nairobi senator Edwin Sifuna demanded that the managers' electorate why the cost of electricity had skyrocketed in the past few months.
Lake Turkana Wind Power Executive Director Rizwan Fazal defended the organization against any wrongdoing.
Fazal said the company saved consumers a whopping Sh45 billion since September 2018 and that they were curtailed when they gave proposals to avoid the crisis in the sector.
“We would like to inform Kenyans that 26 per cent of the power produced in the country is lost in the transmission cycle,” he said.
He added this is caused by old electricity infrastructure which needed to be upgraded.
“We foresaw this problem as early as 2015 but our advice was dismissed by the relevant authorities,” said Fazal.
Fazal also told the committee LTWP has also provided free ‘reactive power’ to KPLC, which he argued that in all other jurisdictions is charged by the power producer to the utility company amounting to Sh700 million.
The Committee Chairperson Nyeri Senator Wahome Wamatinga said that Kenyans wanted to be told why their electricity was expensive
“We have an obligation as the elected representatives of the people to ensure that the cost of electricity which plays a major role in the economy comes,” Wamatinga said.
Tana River senator Danson Mungatana asked whether the management of the Independent Power Producers (IPPs) could consider writing off some of the monies it is claiming from the government as a sign of goodwill.
“Why could you seek some moratorium from the lenders if you knew that there was going to be a delay in the completion of the transmission line?” he posed.
“What stopped you or were you just being motivated by an appetite for interest? You cannot tell me that the contracts are so much cast in a stone that there can never be a conversation around them?” he added.
On his part, Marsabit Senator Mohammed Chute wanted the management of LTWP to tell the committee whether it has met the local community and resolved the land ownership.
This was after the High Court in Meru ruled that the title deed was issued to the firms in an unlawful and irregular manner.
“The local community in areas surrounding Lake Turkana Wind Power plant filed a lawsuit against the company on the grounds that the land was actually community land held in trust by the defunct County Council of Marsabit and was irregularly and illegally allocated to the company,” said Chute.