Construction of Kenya's Turkana wind farm seen starting in early 2014

By Richard Lough NAIROBI (Reuters) - Construction of Kenya's delayed Lake Turkana Wind Power project should begin in the first quarter of 2014 with a shortfall in funding expected to be filled by the end of the year, a co-developer of one of the largest African undertakings of its kind said on Tuesday. The wind farm will have a capacity of 300 megawatts (MW) of power, helping plug a power supply shortfall which. coupled with an ageing grid. means regular blackouts that hamper industry in east Africa's biggest economy. "Q1 next year we should be in construction," Christian Wright, regional director for Aldwych International, told Reuters. "Then it's about 23 months to the first 50 MW of power, then about another seven months or so to get the full 300 MW." The European Investment Bank told Reuters it had board approval for 200 million euros to help finance the Lake Turkana project. That means about 120 million euros of the total project cost of a little more than 600 million euros still need approval, Wright said, adding that the target for financial closure was the end of this year. Denmark's Vestas Wind Systems will supply some 365 wind turbines at the site in the far north of the country. Kenya Power, the country's sole power distributor, will pay a tariff of 7.52 euro cents per kilowatt hour, Wright added. The wind farm had been due to start generating power in June 2011 but the project has been dogged by financing difficulties. Kenya on Monday said it wanted to quadruple its power output by 2017 to unleash faster economic growth, eyeing an additional 5,000 MW of power supply to the existing 1,664 MW generated. It plans liquefied natural gas (LNG) and coal-fired power stations while also tapping vast steam reserves to ramp up geothermal production to wean itself off unreliable rain-fed hydro-electric dams. Power costs for industry, which the private sector says leaves it struggling against global rivals, would fall 37 percent to 9 cents per kwh, according to government projections. Domestic tariffs would nearly halve. But investors at a government briefing said the timeline was ambitious. Some cautioned such a rapid injection of supply could lead to a mismatch with demand, raising concerns over the ability of Kenya Power to pay for all the added power. "There will also be concern that ... if you build so much new capacity up so quickly, will demand actually be able to pick up just as quickly?" said Kurt Simonsen, head of the European Investment Bank (EIB) in east and central Africa.