The Lamu county government has endorsed the Amu coal power plant, paving the way for its construction.
The move comes as a boost to Centum Investment, which won the tender to build the 1,000-megawatt plant.
“We have unanimously approved the power coal plant project in Kwasasi. We are aware that the company engaged the community on its agenda …that shows the community was fully involved and consulted about the power plant,” said Health, Environment and Sanitation Committee chairman Athman Amin.
The Lamu coal plant project is part of the government’s efforts to produce 5,000 megawatts of electricity in a bid to lower the cost of power.
The coal-fired power plant, which Centum said would generate close to half of Kenya’s electricity capacity when completed, would be funded by equity of about $450 million, with the balance of $1.35 billion coming from debt.
This coal project has been in the centre of a legal battle with a consortium of the HCIG Energy Investment Company of China and its local partners, Liketh Investment Kenya, challenging the award of the Sh164 billion plant tender to Centum before withdrawing the case last month.
HCIG had claimed that the Ministry of Energy and Petroleum had unlawfully awarded the tender to a consortium that did not participate in the tender.
A tribunal had in January rejected a challenge against the award of the tender by a rival bidder.
Section 114 of the County Government Act requires the county assembly to approve or reject projects of national importance.
The MCAs reckon that the multi-billion shilling project would empower youth projects through job creation as well as marketing Lamu as an industrial hub.
The county assembly, however, wants the contractor to come up with plans to address the impact of the project on the environment.
Gulf Energy, the consortium involved in the project, said they had conducted various tests on the site of the proposed plant.
“Due to its complexity, we brought on board experts from South Africa, Abu Dhabi and China to carry out specialist studies on various elements.
“The assessment reports will be submitted to Nema and shared with the county assembly and other stakeholders,” said the consortium in a statement.
Construction of the 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 shareholder 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.