In the summer of 2014, thousands of kilometres away from Sarima in the Danish capital of Copenhagen, Lake Turkana Wind Power project was invited to make a presentation at a seminar on sustainable energy at the Danish Ministry of Foreign Affairs. The project represents the largest single private investment in Kenya to date, valued at the time of this seminar at approximately EUR 622 million.
In Copenhagen, the consortium presented the development banks and investors from Africa, Europe and the United States with an ownership stake in the Lake Turkana Wind Power project: KP&P BV from Africa, Aldwych International Limited, Vestas and Sandpiper. Investment funds from Norway, Denmark and Finland are also a part of the owner group according to the consortium’s presentation.
Who is behind the Lake Turkana Wind Power project?
The consortium consists of four private companies and three state-run development funds.
1. Aldwych International Ltd (UK) — 30.75%
2. KP&P Africa BV (NL) — 25.25%
3. Finnish Fund for Industrial Cooperation (FI): 12.5%.
4. Norwegian Investment Fund for Developing Countries (NO): 12.5%
5. Vestas (DK) — 12.8%
6. Danish Industrial Fund for Developing Countries (IFU): 6.25%
7. Sandpiper — 0.25%
They also presented a CSR programme, Winds of Change (WoC), in which a combination of revenue from carbon credits and profits go into a trust fund to pay for benefits like education, health, boreholes for drinking water, solarpanels for the local communities, since they won’t benefit from the wind power generated by the project.
Furthermore, the project said that it will provide approximately 2500 jobs during the construction period and 200 full-time positions when it is done. As of February 2016, 624 community members have been hired by the wind power project, of which 92 are locals from Sarima, according to the consortium’s own records. The rest of the jobs are occupied by locals from the surrounding areas of Mt Kulal, Loiyangalani, South Horr and Kargi as part of the consortium’s “fair and equal work programme”.
The Danish Export Credit Agency, which have provided loan guarantees for EUR 138 million, points out that since the CSR foundation is tied to the income from the wind farm, the largest part of CSR activities will not begin until the wind power park is done and running in 2017, 11 years after the project began. According to the consortium’s official statement to Danwatch, the CSR Foundation:“Is not possible until the project have received sufficient financial support to make it a reality. This is because funding for WoC will principally come from Lake Turkana Wind Power, through the transfer of a portion of the wind farm’s revenue. It is expected that the project will contribute about 10 million euro over its 20-year operational life”, they state and go on:
“Part of the revenue from the carbon credits earned by the project will be passed to the Ministry of Energy via Kenya Power and Lighting Company (KPLC). It is our understanding that these funds will be applied to benefit the communities living near the wind farm and along the power transmission line, however this will be the responsibility of national and local government”.
Who has provided capital for the wind farm?
Lake Turkana Wind Power is the single largest private investment in the history of Kenya, and lenders from Europe, the United States and Africa have collectively raised millions of euros.
1. African Development Bank (AfDB) — has provided a loan of EUR 115 million. In addition, the AfDB Group is processing an ADF Partial Risk Guarantee for EUR 20 million to cover the risk related to the completion of the transmission line, which is crucial for the project.
2. German Investment Corporation (DEG) — has invested EUR 20 million. (EUR 37 million according to WTO)
3. European Investment Bank (EIB) — Proposed investment of approximately EUR 225 million
4. Dutch Development Bank (FMO) — EUR 35 million in senior debt and up to EUR 8.5 million in (partly stand-by) equity through shareholder Aldwych Turkana Investments Ltd. In addition, the Dutch Government provided a EUR 10 million grant for the rehabilitation of the access roads to the project site.
5. French Development Finance Institution (PROPARCO) — senior loan of EUR 50 million (with an Interact Climate Change Facility (ICCF) sub-participation of EUR 30 million)
6. Overseas Private Investment Corporation (OPIC) — investment guarantee of up to EUR 223.89 million (USD 250 million)
7. Eksportkreditfonden (EKF) — investment guarantees of EUR 138 million (DKK 1030 million), split between a EUR 23, 04 million guarantee to AfDB and a EUR 114.95 million guarantee to EIB
8. Triodos Groenfonds — has provided a small loan to African Development Bank and is the only financial institution involved that permits retail clients to directly engage with the Lake Turkana project.
Ethical guidelines for Lake Turkana Wind Power
At the seminar, the Lake Turkana Wind Power project representatives in Copenhagen also promised that: “The Project has been developed in compliance with all relevant local and international legislation and standards, including the IFC Performance Standards and Equator Principles.”
The International Finance Corporation (IFC) is the private sector arm of the World Bank Group with a 50 billion dollar portfolio in more than 100 countries, where they “support the private and public sectors’ efforts to create businesses and jobs in the fight against poverty”, their website says.
If a company or a state wants funds from the World Bank Group, they usually have to demonstrate that they are aware of their projects social and environmental impacts.
States must first and foremost protect human rights and businesses must respect human rights; this is the core of the Protect, Respect and Remedy framework in the UN Guiding Principles on Business and Human Rights, according to Bas Rombouts, ass. professor at Tilburg University and an expert on indigenous peoples and human rights.
Basic human rights in this case include the right to make a living, the right to land and the right to not be arbitrarily deprived of land.
“It is the core responsibility of companies to respect human rights. And companies should do so by performing a so-called human rights due diligence. Briefly, this means that companies must first examine the current and potential effects of their actions on human rights, and that they must then take action to measure these effects. Finally, it means that they must be transparent about their approach, for instance publicising what they have done,” Bas Rombouts says.
If a state or a company wants to resettle a community from their land, a variety of established procedures exist. Lake Turkana Wind Power project says their project is in compliance with the World Bank’s IFC Performance Standards, which cover eight issues. In this case, mainly Performance Standard #5, Land Acquisition and Involuntary Resettlement, and #7, Indigenous Peoples, are interesting to take a closer look at.
At a first glance of the chapter, “Land Acquisition and Involuntary Resettlement,” it is apparent that, whether voluntary or involuntary, if a state and a company plan to remove people from their land, acquiring it through eminent domain or other powers of the state, it cannot be stopped.
According to Standard 5, “Resettlement is considered involuntary when affected persons or communities do not have the right to refuse land acquisition or restrictions on land use that result in physical or economic displacement. This occurs in cases of (i) lawful expropriation or temporary or permanent restrictions on land use and (ii) negotiated settlements in which the buyer can resort to expropriation or impose legal restrictions on land use if negotiations with the seller fail”.
An important point about land acquisition and resettlement is how and when the communities are informed or consulted. Among other things, it is important to avoid or minimize adverse social and economic impacts from land acquisition or restrictions on land use and to compensate for loss of assets:
Ensuring that resettlement activities are implemented with appropriate disclosure of information, consultation and the informed participation of those affected”, according to Performance Standard 5. This means proper consultation with and participation of everyone affected by the wind power project.
In Sarima, the Turkana moved voluntarily, and while most of the residents Danwatch interviewed, appreciate the project, many were dissatisfied with the number and the content of public consultations that occurred before the land was leased to the consortium.
Documentation from the consortium shows many public meetings and consultations about the project, benefits and consequences. Danwatch has asked the consoritum and the lenders for documentation for public consultations prior to November 26, 2006, when Marsabit County Council received the land lease application from Lake Turkana Wind Power project. This documentation has not yet been provided. In a statement from the consortium, they say:
“The National government through the Ministry of Lands and Housing provided the regulatory framework all through the land acquisition process. Lake Turkana Wind Power project undertook thorough feasibility studies that entailed extensive consultations with the local communities over a nine-year period with the goal to ensure that broad community support was in place. This process involved the local county administration as well as the community members and leaders in the area covered by the land lease”.
The public consultations were mainly about impacts of the project, not the land lease, the consortium statements says:
”Consultation and discussions primarily focused on what the project is and what potential positive and negative impacts it could have. It also included measures that would be put in place to enhance the benefits of the positive impacts and mitigate against negative impacts”.
Danwatch has asked the Ministry of Lands and Housing and the consortium, whether consultations about land acquisition took place before the land lease application was sent to Marsabit County Council in 2006.
The consortium says their first official consultation was 15 November 2007, but does not comment on whether communities were informed/consulted about the lease of the land, which was initiated a year earlier. The Ministry of Lands and Housing has not been available for an interview despite several inquiries.
CSR projects as of May ’16, according to Lake Turkana Wind Power project
Distribution of books and pens to schools located along the access road from Laisamis to Loiyangalani
Construction of a community store and chief’s office, Illaut
Installation of solar pump to a borehole and construction of livestock troughs, Mt. Kulal
Installation of a water filtration system, construction of a pump house
Construction of two water troughs for livestock
Upgrading of Burri-Aramia dispensary, to include solar power system, refrigerator, installation of shelves for storage of medicines, construction of toilets, construction of an incinerator, supply of a maternity bed and ward beds, provision of carts to carry medicine, installation of reserve water tank fitted with a pump, supply of racks for storing bags of food and installation of pipping of water to rooms in the clinic
Upon request from the community, erection of a fence along the side of the market that runs parallel to the access road in order to mitigate against the risk posed by increased traffic
Assembly and distribution of 500 desks to schools located in communities along the access road from Laisamis to Loiyangalani
Construction of police accommodation units and offices Loiyangalani
Donation of printer to Kulal Girls Sec. School Mt. Kulal
Handover of an LTWP office to the community of Kurungu, to be used as a maternity ward
Rehabilitation of a football pitch Namaeri
HIV/AIDS awareness raising campaign in all communities located between Laisamis and Loiyangalani
Construction of a 7 km water pipeline to transport water directly into Arge Arge
Road safety awareness raising campaign in all communities located between Laisamis and Loiyangalani
IFC Performance Standard 5: Land Acquisition and Involuntary Resettlement
Right to land
Displaced persons may be classified as persons (i) who have formal legal rights to the land or assets they occupy or use; (ii) who do not have formal legal rights to land or assets, but have a claim to land that is recognized or recognizable under national law; or (iii) who have no recognizable legal right or claim to the land or assets they occupy or use. The census will establish the status of the displaced persons.
Cash compensation
In the case of physically displaced persons under paragraph 17 (i) or (ii), the client will offer the choice of replacement property of equal or higher value, security of tenure, equivalent or better characteristics, and advantages of location or cash compensation where appropriate. Compensation in kind should be considered in lieu of cash. Cash compensation levels should be sufficient to replace the lost land and other assets at full replacement cost in local markets.
Housing
In the case of physically displaced persons under paragraph 17 (iii), the client will offer them a choice of options for adequate housing with security of tenure so that they can resettle legally without having to face the risk of forced eviction. Where these displaced persons own and occupy structures, the client will compensate them for the loss of assets other than land, such as dwellings and other improvements to the land, at full replacement cost, provided that these persons have been occupying the project area prior to the cut-off date for eligibility.
Source: IFC Performance Standards 5
Originally published at www.danwatch.dk.
