Kenyan taxpayers have been forced to bail out a debt-ridden Spanish contractor building the Lake Turkana Wind power transmission line to ensure the project is completed by June.
Energy Cabinet Secretary Charles Keter said the government has moved in to pay subcontractors and suppliers owed by Madrid-based Isolux, the firm which bagged the tender for the 428km high-voltage line in 2011. The project is yet to be completed.
The deal will see the government directly pay suppliers and recover the cash later from the €42.7 million (Sh4.7 billion) balance due to be wired by the Spanish Government, which is funding construction of the power line.
“We want to deal with contractors directly and then seek reimbursement from the Spanish government. An account has been opened at Kenya Commercial Bank. The bank will issue letters of credit to suppliers to guarantee timely payments,” Mr Keter said in an interview with the Sunday Nation.
“We want to give comfort to suppliers. We are working to beat the June deadline,” the minister added.
About Sh1.6 billion is currently owed to suppliers, the minister said. Isolux was initially expected to complete the power line by the end of 2013.