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Taxpayers will pay a total of Sh27.1 billion for the 100MW Kipeto Wind Power project between now and 2041.

It has emerged that Kipeto Energy Limited, an Independent Power Producer (IPP), compensated land owners in Kiserian, Kajiado County where the firm is located a total of Sh3.2 billion with one land owner being given a whooping Sh1billion for a 4km stretch.

The revelations were made during the probe by the Senate Energy committee investigating the cause of high cost of electricity.

Yesterday, Kipeto Energy Limited chairman Kenneth Onyango had a difficult time explaining to the committee why his firm is charging more for producing energy than KenGen’s Ngong’ wind power yet they are both located in the same region.

A statements of accounts submitted to the committee shows that the total amount due to Kipeto Energy is Sh3.6 billion ($26.5 million) owed by Kenya Power and Lighting Company (KPLC), the utility firm that signed a contract with Kipeto to supply power.

Onyango said the high cost of electricity should be attributed to long periods the firms take before they start producing power and become economically viable.

Feed-in-Tariff

Onyango told the committee that his firm first had to negotiate with the community in order to lease the land for 30 years, a process that, he said, took long to conclude.

“The community involvement was very critical for us to start this project. The start of this project took too long which has had a bearing on the tariff. But if we allow more cheaper generations to come through, the cost of electricity will come down,” he said.

He added: “There should be promptness of generation of power if the cost is to reduce. It takes long to start generation of power.”

However, according to the Presidential Taskforce Report, Kipeto Power plant enjoys a relatively high Feed-in-Tariff (FiT) tariff of 40 per cent compared to KenGen’s Ngong power plant.

A FiT is an instrument for promoting generation of electricity from renewable energy sources and allows power producers to sell renewable energy generated electricity to an off-taker at a pre-determined tariff for a given period of time.

The report observes that if both the two plants had the same load factors, the annual savings could be in the region of Sh810 million.

Onyango disclosed to Senators that his power utility firm spent Sh675 million to construct three and four-bedroom bungalows for 84 households who were displaced to pave way for Kipeto’s establishment.

High uptake

He explained that the even though the plant has the capacity to generate 100MW of power, KPLC curtails its uptake from 7am-5pm.

KPLC uses power produced by Kipeto from 5.30pm to around 10pm because there is high power usage during the hours, Onyango said.

“We have never been curtailed not to dispatch power from 7am-5pm. There are a number of industries in Kajiado especially in Kitengela and Athi River. From 5pm to about 10pm, this is the time there is high power uptake,” said Onyango.

Senators Ledama ole Kina (Narok) and Edwin Sifuna (Nairobi) asked why the firm was billing Kenyans for projects they were passing off as Corporate Social Responsibility (CSR).

“You are billing us the cost of construction of the power plant, you are billing us the cost of land compensation and you are billing us the cost of construction of the houses of the people you displaced. You are not doing this as a CSR,” charged Ole Kina.

Sifuna also questioned why the firm owned by Kenyans is registered in Mauritius.

“We are not against investors but why would four Kenyans register an energy power firm in an offshore tax haven?” posed Sifuna.

But Onyango explained that the investors had to register the company in Mauritius because local banks refused to finance the project.

“This is just because of financing structure. If the local banks had agreed to finance us, we would not have gone outside. It had to take international banks outside Kenya to guarantee to finance this project. We went to local banks but none were willing to finance the project,” he said.