Investors backing Kenya's 300MW Lake Turkana wind power project, which was stalled by a lack of letters of credit (L/Cs), are confident that it will go ahead soon.

The government says it is now prepared to support the project, which provides investors' sufficient confidence to put up the funds required for construction to start.

Letter of support

The US$870 million project was scheduled to be operational by June 2011 and running at full capacity a year later, but has been delayed for over a year due to L/C problems (DC World News, 26 November 2009).

Now that the government has come up with an official letter of support, the project developers believe that financial close is imminent.

Sovereign guarantee

Provided the financing issues are resolved, the Lake Turkana wind power project could be operational by late 2013.

It is unclear whether the letter of support represents a sovereign guarantee for the proposed L/Cs or whether a new financing structure has been agreed.

The Kenyan government nearly always rejects requests for sovereign guarantees on obligations entered into by state corporations such as the proposed offtaker of power from the Lake Turkana project.

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