AfDB Approval of USD 149.5 Million Loan to Turkana Wind Power Project in Kenya

AfDB Facilitates Energy Diversification and Access to Clean Energy with the Approval of USD 149.5 million Loan to Turkana Wind Power Project in Kenya.

Mr. Carlo Van Wageningen (Chairman, Lake Turkana Wind Power) and Mr. Gabriel Negatu (Africa Development Bank Regional Director for the East Africa Resource Centre).

Mr. Carlo Van Wageningen (Chairman, Lake Turkana Wind Power) and Mr. Gabriel Negatu (Africa Development Bank Regional Director for the East Africa Resource Centre).

The Board of Directors of the African Development Bank (AfDB) approved USD 149.5 million in financing for a wind power project in Kenya’s Lake Turkana region. The project will add 300 MW to power generation capacity and will benefit Kenya by providing clean and affordable energy that will reduce the overall energy cost to end consumers. Furthermore, the project will allow the landlocked Great Rift Valley region to be connected to the rest of the country through the improved infrastructure linked to the wind farm, including a road, fiber-optic cable and electrification.

This zero-emission project will contribute in filling the energy gap in the country, enhancing energy diversification and saving 16,000,000 tons of CO2 emissions compared to a fossil fuel fired power plant. The project will be implemented by Lake Turkana Wind Power, a special purpose vehicle, created in September 2006. The group of investors includes Kemperman Paardekooper & Partners Africa, Aldwych International Ltd., the Investment Fund for Developing Countries of Denmark, Norfund, and Vestas Wind Systems AS.

None of this would be possible without the commitment of the Government of Kenya. Catalytic to this investment is the fact that the Government of Kenya will construct the 428 km transmission line required to evacuate power from the project site to the national grid. To this end, the Government of Kenya has secured financing from the Spanish Government.

Mr. Gabriel Negatu - Africa Development Bank Regional Director for the East Africa Resource Centre

Africa Development Bank Regional Director for the East Africa Resource Centre, Mr. Gabriel Negatu explained that the Lake Turkana Wind Power Project will include the construction and operation of a 300 MW wind farm with 365 turbines of 850 KW capacity each.

The AfDB has taken a lead role in developing what will be the largest wind power project in Africa. Spearheading the project’s transactions, the Bank built the confidence of potential investors on mitigation of environmental and governance risks, ultimately attracting additional investors in the project such as commercial banks. As the Mandated Lead Arranger for the project, AfDB will raise over USD 165.1 million in senior debt and a further USD 75.4 million of subordinated debt. Following Board approval, the Bank will officially launch the project to the public and hold a series of presentations for potential lenders in the coming weeks.

The approval of the 149.5 million financing by AfDB for LTWP is a major milestone in the development of the project. It is also proof that Financial Close is now in sight. We are grateful and we salute AfDB's commitment and unwavering support to the project. Their (AfDB) commitment benefits LTWP, but more importantly, Kenya as a whole. Seven long, arduous and challenging years have passed, since we first dreamt of this wind farm, but the resolve and commitment remains unchanged by all the investors in LTWP. We are equally grateful to KP&P, Aldwych International, Norfund, Vestas and IFU for the patience and commitment that they have shown throughout these years. We are eager to start construction on the power plant and finally deliver this project to Kenya.

Mr. Carlo Van Wageningen - Chairman Lake Turkana Wind Power (LTWP)

The Lake Turkana Wind Project will enable the country to substitute generation of clean and low cost energy from more expensive plants operating on imported diesel and fuel oil. In addition, the Project-related investments will increase employment of local labour during the construction phase and upgrade the rural road network, significantly improving access to markets and business opportunities for the local communities, thus catalyzing additional jobs and income-generation opportunities in this poor and remote area. Moreover, the Project’s Corporate Social Responsibility Program will support investments in the local health facilities, potable water supply and school buildings.

The project will complement other transactions currently underway, which are also supported by the AfDB, including Thika Thermal Project and Menengai Geothermal Power. Building on its integrated approach to infrastructure development, the Bank’s ultimate aim is to establish Kenya, in particular and East Africa, in general, as an ideal place for business and investment through adequate energy supply capabilities.

As requested by the Government of Kenya, the Bank will provide a partial risk guarantee to protect the project against the risk of delays in the construction of the transmission line, thereby providing additional comfort to prospective lenders.

Mr. Gabriel Negatu - Africa Development Bank Regional Director for the East Africa Resource Centre

The African Development Bank (AfDB) Group is a multi- lateral development finance institution established to contribute to the economic development and the social progress of African countries. The Lake Turkana Wind Power Project (LTWP) aims to provide 300 MW of reliable, low cost wind power to the Kenya national grid, equivalent to approximately 20% of the current installed electricity generating capacity. The Project is of significant strategic benefit to Kenya, and at KSh. 70 billion (€ 600 million) will be the largest single private investment in Kenya's history.