Lake Turkana nails $870m finance

Finance agreements worth $870m have been signed for the Lake Turkana wind project in Kenya, said investor Harith General Partners.

Harith said the agreements mark a "breakthrough" in getting the 300MW wind farm – set to be one of Africa’s largest – off the drawing board and into construction after years of negotiations.

Denmark’s Vestas is in line to supply turbines to the project, which developers say will be located at “one of the best sites for a wind farm in the world” between two mountain ranges.

Utility Kenya Power has signed a 20-year power purchase agreement for the plant’s output, said South Africa-based Harith, whose Pan African Infrastructure Development Fund is majority owner of lead developer Aldwych.

The finance will come from a mix of equity, mezzanine debt and senior debt, it added.

Lake Turkana has been the subject of several false dawns, with construction originally due to start in mid-2011, before being pushed back to the end of that year, then into 2012, and then going quiet.

The project received a kick-start last year thanks to the African Development Bank, which agreed to partially guarantee construction of a 428km transmission link for the wind farm.

AfDB is the lead in a syndicate of banks backing Lake Turkana, which also includes Standard Bank, Nedbank, the European Investment Bank (EIB), DEG and Proparco.

The EIB will provide €200m of senior debt, with the the EU taking a €25m equity share through the EU-Africa Infrastructure Trust Fund.

No schedule was given for construction or operation of the wind farm in today’s statement.

The wind farm will play a huge role in helping Kenya to diversify its power mix and save its government millions of dollars currently spent on importing fuel, say its backers.

A second utility-scale wind farm is also under development , the 61MW Kinangop, which will use GE turbines and is due to come online next year.

Note: Update provides figures on EU loans to project