Coal firm offers to pay 25.5pc of revenue to State

Chinese consortium HCIG Energy Investment Company and Kenyan partner Liketh Investments who last week won the mining contract for the remaining two coal blocks in Kitui’s Mui basin will pay a 25.5 per cent share of expected gross revenue to the government.

Energy ministry’s Chief Geologist John Omenge said the HCIG consortium offered a higher profit share than the two competing consortia of Transcentury Investments Limited, Continental Coal and Power Machines OJSC; and China Northeast Electric Power Engineering Corporation and China Coal technology and Engineering Group.

He did not, however, disclose the revenue share offers by the two losing bidders.

The revenue share offer, according to Mr Omenge, is higher than the 23.6 per cent and 21 per cent share that Fenxi Mui Mining Company gave for Blocks C and D respectively in 2011.

Mr Omenge said the HCIG consortium would now be invited for negotiations with the ministry as per the tender requirements on the basis of their responsiveness in the technical and financial proposals that they submitted.

The consortium bitterly protested last year after it lost another bid to construct a 960-megawatt coal power plant in Lamu, before moving to court.

HCIG had contested the awarding of the $1.8 billion (Sh164 billion) tender to a rival consortium that included Centum Investment, an NSE-listed firm part-owned by billionaire businessman Chris Kirubi.

The Chinese consortium has been tasked with the construction of a coal-fired power plant that will sell surplus electricity to the national grid.

It will join Fenxi in pitching tent at the Mui basin for the next 21 years to exploit the resources simultaneously.

In the tender notice, the successful bidder was required to satisfy tough financial and technical conditions, including the ability to raise funds in excess of $200 million (Sh19.6 billion).

The bidders were also required to demonstrate evidence of technical capability and a history of having undertaken coal mining projects of similar nature in at least three developing countries.

“Those interested will have to prove .... a clear demonstration of effective environmental preservation,” the tender notice read.