Kenya delays signing Qatar gas deal after Wajir discovery

What you need to know:

The July discovery of commercially viable gas in Wajir has slowed down the deal with Qatar for the supply of one million metric tonnes per annum of liquefied natural gas (LNG) to power a 700-megawatt gas plant in Mombasa.
Canadian firm Africa Oil found an estimated 1.8 trillion cubic meters of gas, covering an area of 200 square kilometres in Wajir, which should lead to development of cheaper power.
Kenya wants to halve the cost of electricity within three to four years from about Sh17 per kilowatt hour.

Kenya is delaying signing a deal for the importation of natural gas from Qatar following the discovery of the commodity in the country.

The Energy ministry says the July discovery of commercially viable gas in Wajir has slowed down the deal with Qatar for the supply of one million metric tonnes per annum of liquefied natural gas (LNG) to power a 700-megawatt gas plant in Mombasa.

The Kenya Pipeline Company had in April signed a non-disclosure agreement with Qatar Gas after President Uhuru Kenyatta struck a deal with the Middle East nation.

“We have to be careful not to rush. You don’t want to commit yourself say for 10 years and find you have your own gas which you can’t find market for,” Energy secretary Davis Chirchir told the Business Daily.

Canadian firm Africa Oil found an estimated 1.8 trillion cubic meters of gas, covering an area of 200 square kilometres in Wajir, which should lead to development of cheaper power.

Kenya wants to halve the cost of electricity within three to four years from about Sh17 per kilowatt hour, mainly by increasing supply from cheaper energy sources like natural gas and geothermal while phasing out diesel generation.

This has prompted the Energy ministry to mull over building a 500 megawatts natural gas power plant in Wajir.

This could to lead to changes in earlier plans to build a 700MW natural gas plant in Dongo Kundu, Mombasa, to boost the country’s power supply.

The Mombasa plant was to be fed by natural gas from Qatar.

READ: Wajir gas find alters 700MW Coast plant plans

Tenders for the plant in Dongo Kundu issued last year were not successful, with sources saying the government may opt to shelve the plans altogether in favour of the plant in Hadado, Wajir.

The Public Privatisation Unit at the Treasury said the tendering process would be repeated after bids failed to meet the set criteria. The tender received two bids with other interested firms asking for a longer implementation timetable, which had been set at 18 months.

The gas-powered power plant was part of the government’s plans to add 5,000MW to the existing 1,664MW generation capacity by 2017 to spur economic growth, pushing demand for power up to 15,000 MW by 2030.

Among the bidders were China Petroleum, Tata Power in a consortium with Gulf Energy, Globeleq, Mitsui and Company, Toyota Tyusho, Marubeni Corporation, Samsung C and T, GMR Energy, Quantum power and GDF Suez.