Kenya Pipeline Company has signed a deal with State-owned Qatargas for the supply of one million tonnes of natural gas annually to power the planned 700-megawatt gas-fired plant in Dongo Kundu, Mombasa.
The deal was brokered by President Uhuru Kenyatta who is currently in Qatar scouting for investors to help Kenya generate cheaper power from liquefied natural gas (LNG) as an alternative to diesel.
Qatargas is the world’s largest LNG producer with annual production volumes of 42 million tonnes and the gas supplies will be used to produce cheaper electricity necessary to lower the cost of doing business and attract investors to Kenya.
Kenya is turning to LNG due to its clean-burning, lower emission qualities and cheaper cost compared to traditional fossil fuels like diesel which are expensive with high levels of carbon dioxide emission.
“I encourage Qatari entities in the energy sector to participate in the Kenyan energy sector where substantial returns and mutual benefits can be expected,” said President Kenyatta in Doha during a meeting with Qatari Energy and Industry minister Mohamed Saleh Al Sada.
“Co-operation with Qatar in the energy sector will not only benefit Kenya but also our neighbours by opening the region to diverse investments.”
Ministry of Energy in January shortlisted 12 firms to set up the 700-megawatt gas-fired power plant in Mombasa under a build, own operate model.
The firms included global giants such as Tata Power, China Petroleum, Globeleq, GDF Suez, Toyota and Samsung. Kenya is turning to cheaper and green energy sources such as geothermal, wind and natural gas to reduce the cost of electricity to Sh9.10 per kilowatt hour from the current average of Sh17.20 per unit for domestic households.
The investment in LNG power plants is also meant to cut reliance on hydro-electricity which is susceptible to weather changes such as drought.
The Kenya Electricity Generating Company also plans to convert its diesel-powered Kipevu plants to gas-fired for cheaper and cleaner electricity.