Kenya invites bids for coal exploration blocks

• Seeks end to reliance on thermal and diesel-fired electricity
• Coal will also go to cement and steel plants

Kenya has invited investors to bid for the exploration and development of two coal blocks in the country's eastern region, the energy ministry said on Wednesday, as it pushes to diversify energy sources to meet growing demand for power.

Potential bidders must be able to show the ability to raise in excess of $200 million for investment and a track record of establishing projects with an output of at least 3,000 tonnes per day. Bids must be submitted no later than July 16.

Some of the coal will go to the cement and steel industries, which import 3.6 billion shillings ($40 million) of coal a year. The rest will be used for electricity generation, reducing reliance on thermal and diesel-fired plants to fill deficits in supply.

The ministry awarded development rights for two blocks in the Mui basin, C and D, to China's Fenxi Mining Group in December last year. It said the new blocks it plans to lease out, A and B, lie in the same basin. Kenya estimates that block C contains a minimum of 400 million tonnes of coal.

(Read: Kenya close to sealing more offshore oil search deals)

Fenxi is expected to pay $3 million for block C and $500,000 for block D, in return for a renewable concession of 21 years, subject to approval by parliament.

Kenya has also received increased attention from oil and gas explorers after Britain's Tullow Oil found oil in Kenya, though the commercial viability of the find has yet to be determined.

(Read: Tullow finds more deposits in Ngamia-1 exploration well)

On Wednesday, Australia's Pancontinental Oil and Gas and its partner FAR Ltd said they will start a seismic survey on their offshore Kenyan block, L6, on June 15. It aims to complete the survey by the end of the month at a cost of $13.67 million.