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Economy

State invites bids for coal reserves in Kitui

Energy secretary Davis Chirchir. PHOTO | FILE |
Energy secretary Davis Chirchir. PHOTO | FILE | NATION MEDIA GROUP  Nation Media Group

Investors seeking to extract the remaining coal reserves in Kitui County's Mui Basin must prove their ability to raise investment funds in excess of Sh17.6 billion, among other tougher conditions.

According to conditions spelt out by the government, prospective investors must also demonstrate evidence of technical capability and a history of coal mining projects of similar nature in at least three developing countries.

The move by the government to concession the coal blocks A and B accelerates Kenya's vision of being a coal producer, after the mining contract for the first coal blocks C and D were awarded three years ago to Chinese investors Fenxi Mining Company.

The eligibility criterion were contained in an advertisement placed by the Ministry of Energy and Petroleum in the dailies inviting bids from international mining firms to lease coal blocks A and B for purposes of exploitation and development.

"Those interested will have to prove ability to raise funds in excess of $200 million (Sh17.6 billion in current exchange rates) for the projects and a clear demonstration of effective environmental preservation" the tender notice read.

Bidders for coal blocks C and D were required to prove their ability to raise only Sh8 billion, half of what the new investors are being asked to raise. The concession and eventual award of contract means that mining across the four blocks in the 490 square kilometre Mui basin will ultimately be running simultaneously.

Fenxi Mining Company is currently doing the environmental impact assessment, one of the key milestones in readiness to the actual excavation.

Once exploited, the coal reserves are expected to stop overreliance on hydro power while also cushioning the country's economy against rising global oil prices.

Samples of the coal deposits extracted during the exploration have been chemically analysed and found to meet the required standards - an average calorific value of 18MJ/Kg. The basin has been sub-divided into Zombe, Kabati, Itiko, Mutito, Yoonye, Kateiko, Isekele and Karunga sub-basins.

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