Markets & Finance
Pre-qualified firms to tender for coal power projectsWednesday July 20 2011
Eleven firms have been pre-qualified for a concession to manage the Mui Basin coal deposits in Kitui and construct coal-fired power plants as the government steps up efforts to reduce the country’s reliance on hydro electricity.
The investors, drawn from South Africa, Japan and China are expected to submit proposals to explore and develop the coal resources in four blocks covering an area of 500 square km in parts of Eastern Kenya.
According to evaluation criteria disclosed in the tender announcement, firms offering the government the most in terms of shared revenue will win the contract so long as they exceed a technical score of 70 per cent.
The concession covers exploration, evaluation, extraction, development, production, processing, storage and distribution of coal and coal bed methane in the country, as well as closure of operations, rehabilitation and decommissioning.
Kenya relies on hydropower for most of its electricity but has started diversification into geothermal plants and wind farms as erratic rainfall erodes the reliability of water based energy solutions.
At $0.0954 (Sh8.59) per kilowatt hour, coal is the fourth cheapest source of power after geothermal $0.084 (Sh7.56), nuclear $0.0684 (Sh6.16) and hydro $0.0383 kwh (Sh3.45 per kilowatthour. Wind costs 12 US cents (Sh10.8) per kilowatthour.
Feasibility studies have revealed significant deposits of coal in some of the blocks with 26 wells drilled so far. Coal seams have been encountered at various depths in eleven of these wells ranging from lignite to bituminous type.
Coal prospecting has been a key project for the Ministry of Energy since 2000. Initial surface exploratory activities were concentrated in the 400 square kilometre Mui Basin of Kitui and Mwingi, but in 2002 work moved to Taru Formations in Kwale and Kilifi in Coast Province.
A power master-plan prepared by public policy think tank KIPPRA, a government agency, targets an energy mix comprising 5,110 megawatts from geothermal, 1,039 megawatts from hydro, 2,036 megawatts from wind, 3,615 megawatts from fossil thermal and 3,000 megawatts from coal. Imports and other sources would provide 5,000 megawatts.