Kenya awards 1000MW Coal fired power contract

KENYA HAS AWARDED the first of several tenders for the development of coal-fired power stations in the country. The Lamu coal-fired project was awarded to a consortium led by the Oman based Gulf Energy LLC and Centum investment, a local investment firm.

The project will produce 960MW of coal-generated power on 25 years power purchase agreement. Apart from being the first coal-fired power generator in Kenya, the project is also the first major independent power producer in the country.

 It is thus a curtain raiser as far as PPP in power generation is concerned. It will increase the supply of electricity by almost 50per cent.  As of now, the country produces 1668MW a majority of it is generated by Kengen, the largest generating company in Kenya.

 KenGen will add another 280MW to the national grid later this month thus raising the total capacity to 1948 MW. The Lamu project will add 960MW which is 49.3 percent of the capacity at the end of September 2014.

The project, which will cost US$500 Million, is part of the government’s drive to increase the power supply to 5000MW in the next 40 months. Also in the pipeline is another 900-1000MW coal-fired plant in Kitui County.

The Lamu power plant will initially use imported coal, and later convert to use local coal mined at Mui Basin, Kitui County.

 The government plans to cut the energy cost by 47 percent for industrial consumers and by 37 per for domestic consumers.

 Power generation is a huge business in Kenya for the next 16 years or so. Government projections indicate that power demand will reach 15 000 MW by 2030.

To meet the demand, the country must raise the current capacity of 1 664 MW to 18 000 MW at a cost of US$20 billion, the equivalent of the government’s budget for the 2014/15 Financial year. An estimated US$4 to 5 billion is needed to produce some 5000MW over the next three years.