Kenyan wind project reveals challenges to Obama aid plan 

KINANGOP, Kenya—On a plateau above Kenya’s Rift Valley, farmer David Kinyanjui looks over his cabbage field and the house he refuses to abandon to make way for the country’s first private wind farm—a telling snag for an ambitious U.S. aid program in Africa.

“This is my ancestral land,” said Mr. Kinyanjui, who has joined other farmers blocking the Kinangop wind farm. “I have buried my father there. I have buried my mother there.”

The delay threatens the Kinangop project and much more. The wind farm is an early test of a U.S. program called Power Africa aimed at redefining aid by teaming with private investors to provide what the continent desperately needs: Power.

More than two-thirds of sub-Saharan Africans lack electricity, according to U.S. government figures. In rural areas, that climbs to 85%. Sub-Saharan Africa is expected to need more than $300 billion in investment to reach universal electricity access by 2030.

Unveiled by President Barack Obama in June 2013 on a trip to the continent, Power Africa tries to use U.S. political sway to encourage private investors to put money into sometimes volatile African countries. For example, the Americans are pushing African governments to make investment-friendly regulatory reforms, such as raising utility rate ceilings. U.S. officials are also lobbying international banks for project financing and deploying experts to design stable electrical grids.

This week President Obama hosts his U.S.-Africa summit in Washington, to which he has invited more than 50 heads of state in an attempt to bring the continent back into focus for his foreign policy. Power Africa is at the center of these efforts. While it could help burnish the Obama legacy as he winds down his presidency, it may also work to offset China’s edge in Africa.

China mainly funds state projects that invest in all sorts of infrastructure, from roads to soccer stadiums. The U.S. is attempting to join Africa’s infrastructure build-out with a comparatively small investment and a focus on the power sector.

As a result of the U.S. program, African governments should have an easier route to deep-pocketed investors for big infrastructure projects and investors get U.S. assurances that it will help the projects reach completion.

“African leaders, they recognize that this is the approach that can be sustainable and operate at scale,” said Rajiv Shah, USAID administrator for Africa.

Yet a little more than a year after Mr. Obama announced it, the U.S. effort is struggling for traction.

The Americans have nudged Ethiopia into allowing its first private power project—a geothermal plant—but that took embedding an adviser inside the Ethiopian government. In Tanzania, a number of small solar projects have come online, but required regulatory overhauls for how power is bought and sold are coming slowly. In Nigeria, a massive privatization of power plants is exposing just how dilapidated the structures and the grid have become.

Investors already working on infrastructure in Africa say the Power Africa program is serving as a catalyst, but they caution that it needs to work quickly to have real impact, especially given the continent’s surging population.

Mr. Shah said the U.S. has already surpassed its goals for the number of projects funded and that they are planning to speed up the effort.

“The whole point of Power Africa is to move these projects through much faster,” Mr. Shah said. In the case of the Kenyan wind farm, that means working closely with the Kenyan government “to make sure that the time lines don’t slip.”

Kenya was supposed to be one of the easiest targets. It is considered a business-friendly country accustomed to working with foreign companies in conjunction with aid agencies for ambitious partnerships. Kenya’s power situation is also precarious—the failure of two transmission lines last year caused a nationwide blackout.

But the Kinangop wind farm is proving politically nettlesome and symbolic of the larger challenges facing President Obama’s signature aid program in Africa. Though it was the smallest of the wind projects, Kinangop was scheduled to supply enough power for 150,000 homes by the middle of 2015. The land dispute with farmers has thrown all schedules into question.

“The chatter is already starting with investors saying, OK, maybe Kenya is not my answer,” said Kwame Parker, power and infrastructure head of East Africa for Standard Bank Group, the South African bank that has assembled Kinangop’s financing.

Kameel Virjee, East Africa director for African Infrastructure Investment Managers, or AIIM, which is building the farm, estimates that 30 houses are too close to the proposed turbines. AIIM executives accuse local politicians and activists of interfering with direct discussions with farmers on the project and land compensation.

“We’ve been spending a lot of time talking about what the project is, why it works, why you can’t just dig into your pocket and pull out more money,” Mr. Virjee said.

Andrew Herscowitz, the coordinator of the Power Africa program, said he and his colleagues are readyto help with the negotiations with Kinangop landowners if needed.

“I’ve made it very clear that if asked, we will provide resources to work toward conflict mitigation,” Mr. Herscowitz said.

The U.S. government is also helping to rewrite Kenya’s electrical grid regulations. And advisers have worked to ensure that the grid could accommodate large amounts of wind power.

In Nairobi, Kenya’s cabinet secretary for energy is trying to mediate the dispute, meeting with both farmers and AIIM in recent weeks.

The delays have also cast doubt on whether local Kenyan officials are still behind the project. Mr. Virjee said AIIM had agreed to pay residents 100,000 Kenyan shillings (about $1,100) a year for each wind turbine plot. A politician leading the fight says they are now demanding about five times that.

“The first investors never came clean to my people. They gave them a very raw deal,” said parliamentarian Stephen Kinyanjui Mburu, who represents the area.

The Kinangop farmers scoff at a proposed resettlement scheme. Many say they didn’t realize they would have to vacate so much land for the wind turbines. Mr. Kinyanjui recalls with pride that the last time the company came, they had to bring four truckloads of police for security.

The cabbage and potato farmer says he might be up for resettling if he was given enough money to completely replace his 12-acre farm. But that’s only if the company agrees to scrap contracts signed with landowners years ago for the turbine plots and renegotiate everything from zero.

“From the word ‘go, the way they came in was not good,” he said. “We need to start all over again with a new approach.”