Efforts by the Kenya government to increase energy generation by 5 000 MW over the next three years received a major boost following the award of a $2-billion contract to build a coal power plant in Lamu.
Despite allegations of an irregular tendering process, the Ministry of Energy awarded the contract for the 960 MW plant to a consortium led by Kenyan firms Gulf Energy and Centum.
The other companies in the consortium are Sichuan Electric Power Design & Consulting Company (SEDC), Sichuan No 3 Power Construction Company (SEPCC), both subsidiaries of Chinese energy giant PowerChina, and China Huadian Corporation Power Operation Company.
“The award is a major vote of confidence in the capacity of reputable local companies to lead, fund and own the development of large infrastructure projects in the country in partnership with experienced world-class companies,” says Centum CEO James Mworia.
The project, a critical component of Kenya’s power generation programme, will cost about $2-billion, $500-million of which will be funded by equity and the balance through debt.
Once completed, the plant will be the largest power generating plant in East, Central and Southern Africa (excluding South Africa), and will account for about 55% of Kenya’s power production.
The hotly contested contract attracted 62 local, regional and international companies, some of which disputed the manner in which the contract was awarded, with allegations of massive irregularities being made.
The plant will be located on the Indian Ocean coastline, in Lamu county, and will be implemented through an independent power producer (IPP) framework.
The Gulf consortium will develop the power plant through either a ‘build, own and operate’ or ‘build, own, operate and transfer’ model and sell the electricity generated to Kenya Power.
The Lamu power plant will initially depend on imported coal and later use coal to be mined in the Mui basin, in Kitui county.
It is estimated that power demand in East Africa’s leading economy will increase to 15 000 MW by 2030. To meet this demand, the country must raise the current generation capacity of 1 664 MW to 18 000 MW.