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Economy

Kenya reviews Sh253bn power plan after Dar grabs contract

Energy PS Joseph Njoroge. File PHOTO | NMG
Energy PS Joseph Njoroge. File PHOTO | NMG 

Developers of the proposed Africa’s largest wind power plant in Kenya’s coast have opted to construct only a small fraction of the Sh253 billion mega-project after officials rejected its full capacity.

Sweden-based VR Holding AB said they would build only eight per cent capacity of the planned 600-megawatt wind farm or just 50 megawatts.

The firm had last year expressed interest in building a 600-megawatt project in the Indian Ocean waters bordering Ras Ngomeni in Malindi, but Ministry of Energy officials turned down the request citing lack of a framework for renewable energy projects of that scale.

Kenya’s low electricity demand also informed the rejection of the offshore wind park, prompting the firm’s executives to move the project to neighbouring Tanzania in October, which shares the Indian Ocean coastline.

“We will gladly work with the 50 megawatts as the government suggested and then hope to upgrade,” said Victoria Rikede, an executive at the company. “Tanzania is on and I’m really happy with the turn of events.”

In rejecting the mega-project, Ministry of Energy officials reckoned that a huge power plant would leave the country with excess power that will only force consumers to pay billions of shillings annually for electricity not used.

This would dim the government’s quest to deliver cheaper power through renewable sources.

The authorities, upon receiving the application, had instead directed the Swedish company to construct a smaller capacity project of 50 megawatts.

“The company was to give us a proposal for a smaller capacity plant of 50 megawatts,” Isaac Kiva, director of renewable energy at the ministry said in October after the firm indicated it was moving the project to Tanzania.

The World Bank identified the Malindi offshore location, according to the Swedish firm’s executives.

The firm put the cost of generating electricity from the offshore wind farm at €3.5 million (Sh423 million) per megawatt.

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