Norfund writes off Sh1bn investment in abandoned Kinangop wind farm

Norwegian State-owned investment company Norfund has
written off its Sh1 billion investment in Kinangop Wind
Park project which was cancelled in 2016 after protests
from local communities.
The institutional investor had acquired a 19 percent stake
in the venture in 2013, joining a group of shareholders and
lenders who backed the project that was to have a
generation capacity of 60.8 megawatts (MW).
Old Mutual and Macquarie Group were the company’s
major shareholders and they are expected to have booked
losses of about Sh4.2 billion assuming they have also
written off their capital.
“Unfortunately, the Kinangop Wind Park project had a
negative effect on the returns as values were set to zero
on December 31, 2018 when the operation was shut
down,” Norfund said in its investment disclosures.
Following the project’s collapse, Stanbic Bank appointed
PricewaterhouseCoopers (PwC) as receiver managers. The
Kenyan bank had teamed up with its South African parent
company Standard Bank to fund the venture.
PwC is currently in the process of selling the wind turbines
that had been bought, with the priority being the
settlement of debt.
The project was to cost a total of $150 million (Sh15.5
billion). The process of selling the wind turbines and other
items has dragged on because of the unique nature of the
assets. Only firms interested in expanding or putting up
new wind farms are likely to buy the devices.
Lake Turkana Wind Power is the biggest producer of
electricity from wind in the country with a capacity of
310MW.
State-owned KenGen also runs wind farms in Ngong Hills
and plans to add more such plant in the same area and
other locations including Meru.
The Kinangop wind farm was abandoned after disputes
with locals over compensation for land and other
concerns.
The residents conducted protests, fearing they would be
forced to sell their land while other said the turbines would
cause harm their health.
This resulted in delays that saw funds provided by the
lenders used up before the project was completed.
Shareholders, on the other hand, balked at pumping extra
capital into the venture.
The project sponsors had sued the government seeking
compensation but their case was dismissed by the
International Court of Arbitration which said the protests
did not amount to a political event.