The African Development Bank (AFDB) has withdrawn multi-billion-shilling funding for a 35-megawatt geothermal power project in Menengai, Nakuru over Baringo Senator Gideon Moi’s ownership.
According to two sources familiar with the situation, the AfDB has demanded a change of ownership before it can offer funding to Sosian Menengai Geothermal Power, one of three companies awarded exclusive rights to build a steam plant under a build-own-operate model by State-owned Geothermal Development.
Moi repurchased a majority stake in Sosian Geothermal Power from Devki Group, a company owned by businessman Narendra Raval.
Raval spent Sh8.2 billion on the geothermal assets through Devki Group in 2017.
“The bank is currently engaged on the Quantum Power East Africa (QPEA) project only.
It has previously been engaged on the Sosian project as well but it requires a change in shareholding before it can engage further,” said one of the sources who sought anonymity.
The facility is already eight years behind schedule, with Raval blaming capital injection delays as the primary reason for his departure.
Ormat Technologies and Quantum Power, both listed on the New York Stock Exchange, were the other two companies chosen to create similar power facilities.
On a public-private partnership basis, each was to construct a 35MW steam power station.
“The three independent power producers to construct 105-megawatt (MW) power plants are yet to attain financial closure with their lenders,” the Treasury told Parliament earlier.
According to official and non-official records, the family’s business empire spans real estate, transport, education, hotels, banking, aviation, manufacturing, media, agri-business, security and construction.
Sosian is closely associated with Senator Moi, with his son Kigen Moi and Anastacia Kioko Mululu listed as directors.
Under the agreement, the government’s Geothermal Development Company was to take care of upfront risks and then invite private sector players to construct, own and operate the plants for 25 years.
Kenya offers investors a choice of either local- or foreign currency-denominated feed-in-tariffs, with the latter being favored by international financiers.
Furthermore, Kenya’s energy regulations stipulate that Kenya Power, the sole electricity retailer, must sign 20-year power purchase agreements (PPA) with power producers, offering comfort to private investors to recoup their investments.