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New Lamu line boosts Centum coal plant plan

Kenya Power technicians repair power lines. The
Kenya Power technicians repair power lines. The government plans to connect all public institutions and facilities to electricity. PHOTO | FILE 

Construction of a 520-kilometre line to transmit 1,000MW from the Centum-owned Lamu coal power plant is set to begin in six months.

Kenya Electricity Transmission Company (Ketraco), the State agency managing bulk electricity transport, said construction of the line cutting across five counties will begin once a deal with financiers is finalised and regulators approve the project.

The State agency said African Development Bank (AfDB) had shown interest in financing the project but it should be a few months before the lender’s board approves funding.

The power plant is a subject of litigation after rivals disputed Centum consortium’s win of the coal plant tender. If the listed company gets its way, completion of the project will highly boost its revenue base and profitability.

An Environmental and Social Impact Assessment (ESIA) survey of the project by the National Environment Management Agency (Nema) is expected to take at least 90 days before Ketraco gets a feedback. John Mativo, the head of technical services at Ketraco, said the process of getting all approvals will push the start of construction of the line to around mid-2015.

“The earliest construction can start is in June next year,” Dr Mativo told the Business Daily.

AfDB also signed a Sh2.4 billion partial risk guarantee a year ago for the construction of a 428 kilometre transmission line between Loyangalani in Marsabit and Suswa in Narok.

The line will link substations for the Lake Turkana Wind Power project expected to produce 310MW in 2017 to the national grid. Construction of the Lamu-Nairobi East line will take 24 months. It will start from Komarock in Nairobi and pass through Machakos, Kitui, Garissa, Tana River and Lamu counties.

Ketraco has in the meantime begun preparatory work such as resettling people whose houses are close to the line. Centum Investments and Gulf Energy won the tender to develop the Lamu coal plant in September.

An investor presentation by Centum says it will cost approximately $2 billion (Sh180 billion). It will be mostly financed by debt and take 30 months to complete.

“The project is expected to cost approximately $2 billion (Sh180 billion) and will be structured as 75 per cent debt and 25 per cent equity,” says Centum, associated with billionaire Chris Kirubi, in its half-year briefing. Shanghai Electric Power Company and HCIG Energy, Chinese firms which lost the tender, have moved to court to challenge the award.

The Lamu power plant is part of the government’s plan to add 5,000MW by 2017 and connect an additional two million customers to the national grid especially in rural areas. The government plans to connect all public institutions and facilities to electricity, increasing consumption in the process.

“These will include electrifying the remaining 2,600 main public facilities (trading centres, schools and health centres)...,” says the ESIA report.

Geothermal and wind power plants are the other large energy projects coming up.

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