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Economy

Regulator withholds licence for Sh200 billion coal power plant

Energy Regulatory Commission (ERC) director-general Joseph Ng'ang'a. PHOTO | FILE
Energy Regulatory Commission (ERC) director-general Joseph Ng'ang'a. PHOTO | FILE 

The Energy Regulatory Commission (ERC) has withheld the licence for Kenya’s first coal-fired power plant following environmental concerns of the Sh200 billion project.

ERC director-general Joseph Ng’ang’a on Wednesday said the plant’s operating licence has been put on ice pending a fresh review of complaints raised by a civil society group of the mega-plant’s threats to the environment.

Amu Power Company, the consortium that won the tender to build the plant, in September sought the energy regulator’s approval for power generation and supply ahead of construction of the plant.

This prompted the complaint, Save Lamu Natural Justice, to raise issues about the plant which was meant to inject 1,050-megawatts (MW) into the national grid next year.

“We shall look at the raised concerns and listen to both parties before making our decision,” Mr Ng’ang’a said on phone. The Amu consortium; which brings together firms such as Gulf Energy, Centum Investment and Power Construction Corporation of China, had received the National Environment Management Authority’s (Nema) nod to build East Africa’s first coal plant.

The 1,050 megawatt plant in the coastal town of Lamu is equivalent to 45 per cent of Kenya’s current installed power capacity of 2,333 MW.

A coalition of 35 Lamu community groups, however, recently launched complaints at the National Environmental Tribunal (NET) to challenge the decision by Nema to grant the Lamu coal plant licence.

“The environmental impact assessment (EIA) report has not properly analysed the impact on marine life. The project is harmful to the environment and we are generally worried of such a project to be established in our region,” Save Lamu secretary-general Walid Ahmed said.

“We need the investors to come up with alternative ways of generating power which are friendly to the environment and not coal,” he added.

The activists reckon that emissions from the plant would pollute Lamu’s pristine air, 21 kilometres from plant, and pose health hazards.

They also argue that the project lacks “economic viability.” This has prompted the freeze of the operating licence. Amu officials have in the recent past sought to allay the fears saying they have lined up safety technologies.

Construction of the plant was set to start last September and end in June 2017 but the consortium suffered delays in preparing an environmental impact assessment report to be submitted to Nema for approval.

Land acquisition delays also threw the mega-project into uncertainty. The National Land Commission last November started the takeover of the land from squatters and private investors, clearing a major hurdle which had delayed construction.

The withholding of the licence is set to further delay the project.

The consortium has a power purchase agreement with electricity distributor Kenya Power which will buy the coal-fired electricity at Sh7.5 (7.52 US cents) per kilowatt hour for onward sale to homes and businesses.

At Sh7.5 per unit, the electricity is nearly three times cheaper than what diesel-fired plants charge (Sh20).

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