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Chinese firm signs Sh96bn contract for Lamu coal-fired electricity plant

Francis Njogu, the Amu Power Company CEO. PHOTO | FILE
Francis Njogu, the Amu Power Company CEO. Amu, the consortium that won a tender to construct a coal-fired power plant in Lamu, signed a Sh96 billion ($1 billion) contract for the construction set to start in September. PHOTO | FILE 

The consortium that won a tender to construct a coal-fired power plant in Lamu Monday signed a Sh96 billion ($1 billion) contract for the construction set to start in September.

Amu Power Company, a consortium bringing together firms like Gulf Energy and Centum Investment, said it had signed the deal with Power Construction Corporation of China.

The Chinese firm, part of the consortium, will be in charge of setting up the plant.

“We have signed the construction contract today (Monday),” Amu Power CEO Francis Njogu said on phone from China.

Construction of the 981.5 megawatt plant is expected to start on September 30 and will take 21 months to produce electricity at 7.52 dollar cents per kilowatt hour, almost a third of the price for diesel-fired plants.

The project is valued at Sh192 billion ($2 billion) and will be financed through debt which accounts for three quarters and shareholders’ equity ($500 million).

Amu Power in February bagged a $1.2 billion (Sh1,013.2 billion) financing from the Industrial Commercial Bank of China and is negotiating with local banks for the remaining loan.

The African Development Bank (AfDB) will provide a partial risk guarantee for the coal plant, the largest in East and Central Africa.

The construction is expected to create thousands of jobs for machine operators, engineers and administrators and stimulate consumption of building materials like cement, steel and stones.

Its promoters are already working with the National Youth Service to train locals in technical skills.

Among the outstanding components of the project is the construction of a concrete and steel slab covering 100 square acres and a concrete tower reported to be the tallest in eastern Africa.

The plant is part of the planned Lamu Port South Sudan-Ethiopia Transport corridor and is set to place Kenya among nations which rely on coal energy such as South Africa, the US and China.

Kenya will initially import coal from South Africa and later turn to local supply from Kitui once mining starts.

The consortium has recently sought to win over Lamu leadership, amid claims by civil society activists that the coal project would damage the fragile ecosystem.

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