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Economy

Coal exploration begins with hunt for drilling firms

Mui basin in Kitui where a Chinese company is set to begin coal production soon. PHOTO | SALATON NJAU
Mui basin in Kitui where a Chinese company is set to begin coal production soon. PHOTO | SALATON NJAU 

Exploration of coal deposits in Kwale, Taita Taveta and Kilifi counties has been stepped up with the Energy and Petroleum ministry seeking firms to drill test wells on potential sites.

The drilling, the first in the three counties, will aid in establishing the coal reserve estimates in the zones that are estimated to boast large deposits of rare minerals such as gypsum, titanium and zircon.

A Ministry of Energy exploration work plan seen by the Business Daily shows that 10 drilling sites had been identified each in Kilifi and Kwale as the search for cheaper energy sources gathers momentum.

Contracts for drilling will be awarded on March 19 when bidding for the job closes, the Energy and Petroleum ministry said on Wednesday.

Feasibility tests have shown potential large deposits of coal in the Taru basin that runs across Kwale and Kilifi counties.

Coal has the potential to become one of Kenya’s most reliable and easily accessible base for electricity generation. Despite its potential, however, it provides just about one per cent of the primary energy consumed in the country, mainly by cement manufacturers.

China’s Fenxi Mining Group was recently awarded rights to develop coal blocks C and D within Mui basin and expects to start production soon.

The government estimates that block C contains a minimum of 400 million tonnes of coal. Kenya has sunk 73 appraisal wells within Mui basin and confirmed vast deposits of coal.

Coal is expected to provide up to 2,400MW of electricity by 2030 as per the Least Cost Power Development Plan (LCPDP) 2011/2031 by the Energy ministry.

A consortium led by two Kenyan firms, Centum Investment and Gulf Energy, last year won a government tender to build a 1,000-MW, coal-fired power plant in Lamu.

The two firms have joined forces with foreign firms China Huadian Corporation Power Operation Company, Sichuan Electric Power Design and Consulting Company, and Sichuan No. 3 Power Construction Company for the project.

The new power plant, will cost about $2 billion (Sh178billion), with about $500 million (Sh44.5billion) funded by equity and the balance through debt.

Centum said this week it is working on selling its stakes in several firms to fund new investments in power plants, real estate and other areas.

The Lamu coal plant is among the numerous projects that the Jubilee government is executing under an ambitious scheme to generate 5,000MW of power in 40 months starting September 1, 2013 under the PPP arrangement.

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