Category Archives: renewable energy

Tegeta Escrow

Yesterday Harbinder Singh Sethi and James Buchard Rugemarila were charged with obtaining $22 million and 309 billion Tanzania shillings from the Bank of Tanzania in what’s been dubbed the Tegeta Escrow case.

Perhaps the best summary of the Tegeta Escrow case comes from Africa Confidential (Vol 55 – N° 19) dated 26 September 2014 –

  • Heads may be about to roll after revelations about the contested transfer of 200 billion Tanzania shillings (US$124 million) from an escrow account in the central bank, the Bank of Tanzania, to Harbinder Singh Sethi’s Pan Africa Power Solutions Tanzania Limited (PAP, AC Vol 55 No 13). The complex details of how Sethi acquired Independent Power Tanzania Ltd. (IPTL) and then raided the BoT account have now been pieced together by two opposition members of parliament, Zitto Kabwe and David Zacharia Kafulila, with the help of The Citizen and Mwananchi newspapers.
  • If Sethi’s critics are proved right, this is the country’s biggest corruption scandal to date. Based in South Africa, Sethi is a Tanzanian-born businessman with a reputation for dubious past dealings in Tanzania, Kenya, South Africa and the United States. Sethi claims to have bought 70% of IPTL’s shares from Malaysia’s Mechmar Corporation, now in receivership. Yet Standard Chartered Bank Hong Kong (SCB-HK) claims to have purchased IPTL’s debt for $76 mn. in August 2005 and says Mechmar was already in liquidation when Sethi claimed to have acquired the shares.
  • The Tanzanian behind IPTL, former BoT employee and self-styled international consultant James Rugemalira, is also under investigation over the $75 mn. that he was paid by Sethi for his company’s 30% share in IPTL.
  • Both Sethi and Rugemalira have lived up to Kabwe’s description as ‘aggressive litigators’. Their strategy has been to steer the acquisition of IPTL away from non-Tanzanian jurisdictions (Malaysia and Britain), from other interested parties (SCB-HK) and lawyers, receivers and liquidators in Malaysia and Hong-Kong. In this way, SCB-HK’s property rights in IPTL have been summarily dismissed and attempts by SCB-HK’s lawyers to negotiate a compromise with Tanesco have all been blocked. Furthermore, the findings of the International Centre for Settlement of Investment Disputes over IPTL’s overcharging Tanesco for power supplied and the proposal for a solution involving SCB-HK claims have been ignored. Tanzanian courts have been complicit in rubber-stamping IPTL’s transfer to Sethi’s PAP. None of this helps improve the country’s image abroad.

Other

  • The unfolding details about the Tegeta Escrow case resulted in the removal of four ministers back in 2014. On Saturday, the energy minister, Sospeter Muhongo, resigned over his alleged role in the affair last year that saw $180m (£116m) taken from the country’s central bank. The move follows the removal from office of the attorney general, Frederick Werema, the energy secretary, Eliakim Maswi, and the housing minister, Anna Tibaijuka, who was sacked over the transfer of $1m to her private bank account Chairs of three parliamentary committees have also resigned following the scandal: Victor Mwambalaswa, energy and minerals committee; Andrew Chenge, parliamentary budget committee; and William Ngeleja, legal affairs and governance committee.
  • Back in December 2014, Stanbic Bank Tanzania released a short statement on the-then parliamentary report on Tegeta Escrow and their role.

 

France & Kenya and Renewable Energy

Yesterday there was forum on renewable energy in Nairobi. It was organized by the Embassy of France and the Kenya government to show executives from French energy companies opportunities to invest in renewables and other energy projects in Kenya and Africa. Aqylon, Engie, GreenYellow, Quadran,  Sogea Satom, Total , UrbaSolar, Vegrent, and Vinci representatives were part of the group.

French companies built hydro dams in Kenya

French companies built hydro dams in Kenya

Excerpts

  • Large silent corporations include Engie which produces 3 GW in Africa and Vinci which has EUR  800  million of revenue, and 14,000 staff in Africa.
  • SUNREF from AFD/KAM provides tailored finance for green energy to Kenyan companies through Bank of Africa,  CBA,  Diamond Trust and Cooperative Bank. 11 companies have now been financed, and some that have got SUNREF green energy finance include KTDA, Meru dairy, Strathmore University, and Redland Roses.
  • Kenya has 10 independe power producers (IPP’s) producing 650 MW (28%) of its electricity – shows how vibrant it is for investors.
  • Regional electricity sharing in future: Kenya produces 2,200 MW, Ethiopia 4,284 MW (90% from hydro), Tanzania 1,583 MW (65% from thermal), and Uganda 900 MW (80% from hydro)
  • GreenYellow works with factory, malls, hotels, to finance & build (heat/cold/solar/light) systems that reduce their energy costs by 30%
  • UrbaSolar is working with Kenyatta University on a 100% self-consumption plant that will reduce electricity bills by 80% (20% is night).
  • Total is constructing a 40 MW solar plant at Isiolo with Green Millenia, while Kenya’s rural electrification authority (REA) has got funding to do a 50 MW one near Garissa.
  • KenGen which provides 80% of Kenya’s electricity, has tendered for an Olkaria 5 plant, and will build an industrial park there.
  • There’s opportunity in Kenya off-grid & mini grid electricity, but there’s no legal framework for integrating with the national grid integration & projects sometimes face land acquisition or compensation delays.
  • Solar has not picked up in Kenya, but with drop of photovoltaic prices, there’s lots of interest here now – Energy Permanent Secretary J. Njoroge told the companies..  He also said renewable energy is intermittent – it can only be used up to a certain % of Kenya’s electricity grid supply. Later there was  mention of CSP solar plants which are more complex & expensive than traditional PV ones which but do give stable solar electricity.

Chase & AFD to Finance Renewable Energy in Kenya

This morning, Chase Bank and Agence Française de Développement (AFD) signed a 10 million Euro (~Kshs 1.12 billion), 12 year, credit line for onward lending to businesses that wish to invest in renewable energy projects.

Paul Njaga, the CEO of Chase said that, at the Global Entrepreneurship Summit (GES), the bank had committed Kshs 60 billion to SME funding, and that so far Kshs 20 billion had been disbursed. They had got $40 million from Proparco for SME’s and that the new funding will go to bankable projects in solar, wind, hydro, geothermal, biomass etc. that don’t degrade the environment, as well as as for energy efficiency measures.

The French Ambassador said their renewable energy project, which was launched in 2010, has been great success; To date, $37 million has been used for renewable energy projects that collectively generate 22 MW, and some of these included mini-hydro plants at KTDA tea estates, and the Strathmore University solar roof. He said France has invested 1.5 billion Euros in Kenya over the last ten years, including project through Proparco, their private sector investing subsidiary.

The Kenya Association of Manufactures (KAM) will assist the projects sponsors on feasibility studies and technical support and AFD hopes to sign five more banks in the renewable energy scheme and extend it to Tanzania and Uganda.

Conversion: 1 EUR = Kshs 111, 1 US$ = Kshs 102.

Kenya gets Coal Power

Amu Power is a consortium of Gulf Energy on the technical side and Centum Investments who will do the funding side aims to be the only locally owned independent power producer and will produce 960MW  via coal power at the Kenyan coast.

The plant will be designed and built Chinese partners, supported by the ICBC, the world largest bank, with partial guarantees of the African Development Bank and built to World Bank standards for coal plants. The total cost of the project will be $2 billion and about  Kshs 36 billion will be spent in 21 months of construction around Lamu i.e. about Kshs 1.8 billion in a county that has an annual budget of Kshs. 1.6 billion

The backers are trying to work with the local community where there’s a local unemployment problem; they will need, train, and employ local certified welders plumbers, masons, bricklayers etc. Amu is planning to lease land from the Kenya Ports Authority in Kwasasi on the mainland (not on any of the Lamu islands) for their 100-acre plant that they will operate for 25 years. Coal plants are always set up next to large bodies of water and they plan for excess water they desalinate to be shared with the town people.

The Intention is to use coal from Kitui, Kenya once production there starts but the plant will be built to use South African grades of coal that may be imported in the interim. The founders say coal is necessary for industrial growth to a scale that hydro and renewable energy can’t match. South Africa is 94% powered by coal, the US 43%, China 81% and India 68%.

Financing Lake Turkana Wind

Monday saw the signing of final agreements for the financing of the Lake Turkana Wind Power – LTWP project.

This was the completion of a long, 9-year process that began with a fishing trip on Lake Turkana, that yielded no fish, but a lot of wind on the boat trip. The LTWP which will generate 300 MW, using 365 turbines in Laisamis (Marsabit) was registered in 2006. Aldwych International  was brought on  as an investment and development partner in 2009.

The signing of finance deals worth 498 million euros (~ Kshs. 60 billion), will go towards LTWP which at Kshs. 75 billion is arguably both, the largest single wind power plant in Africa and, the largest single private investment in Kenya. 

The Kenya Government has committed to raising the country’s electricity generation capacity to 5,538MW (from the current 1,533MW) by the year 2017. 630MW of that will be from wind, and they have identified five strong wind areas in Ngong, Turkana, Kinangop, Kipeto, and Isiolo – and hopes that using renewable sources of energy like the wind will bring down the cost of electricity to consumers, and save on fuel import costs for the country. The government’s KETRACO agency will build a 428 kilometre, 400 kV line, from Loyangalani to Suswa Suswa to Laisamis that they say will be ready in 24 months and which will also link up with geothermal plants along the way.
Image from LTWP website

Financiers in LTWP include the African Development Bank (AfDB) who are the lead arrangers and who have provided a guarantee against some delays. The bank has also financed $1.7 billion in power generation in Africa, with 39% of that going to private sector companies. Others are the European Investment Bank. Standard Bank (Stanbic), FMO, Nedbank, EADB, PTA, PKF, DEG, Proparco and soon OPIC (US). Other partners in LTWP include Vestas (turbine supplier), the governments of Denmark (providing EUR 135 million including 120M in export credits), Netherlands, and Spain (who are financing the Laisamis- to Suswa transmission line).

Next, the Kenya government wants to expand the number of last-mile electricity connections while KETRACO also plans to extend the transmission lines to Northern and North Eastern Kenya – and on to Ethiopia, Tanzania and Uganda. This will serve the regional transmission purposes and also open up Northern Kenya. Joseph Njoroge, the Energy Principal Secretary, said additional electricity opens up opportunities such as enabling the pumping of crude oil, the possibility for electric trains to run on the Standard Gauge Railway, iron smelting, as well as clinker production (by Athi River Mining and Dangote).

edit October 2015: A deal by Google to buy shares from Vestas fell through in 2016.

edit March 2023. Some shareholding changes at Lake Turkana Wind Power as CPF UK Holdings to acquire a controlling 31.25% stake from other shareholders.

edit: The new investor buying out Finnfund, is the Climate Finance Partnership (CFP), a fund managed by BlackRock Alternatives. Finnfund, which was a shareholder since the construction began in 2014, exits after doubling its investments in “undeniably one of the best wind sites in the world” – that was built on time and on budget despite its size and remote location. Finnfund will continue to make more renewable energy investments, including a recent one in a geothermal power project in Nakuru County, Kenya.