Kenyan-Led Consortium to Build 1,000-Megawatt Coal-Fired Power Plant with Chinese

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Written by Richard Finlayson, Senior International Editor for Industrial Info Resources (Sugar Land, Texas)--A consortium led by two Kenya-based companies has won a $2 billion government contract to build a 1,000-megawatt (MW), coal-fired power plant, to be located in Lamu County, Kenya, the government announced. Gulf Energy Limited (Nairobi) and Centum Investment Company (Nairobi Kenya) led the consortium, which also includes Sichuan No 3 Power Construction Company (SEPCC) and Sichaun Power Design and Consulting Company (SEDC). The Chinese companies are subsidiaries of the state-owned energy major PowerChina (Beijing) and China Huadian Corporation Power Operation Company.

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David Chirchir, cabinet secretary in the Ministry of Energy and Petroleum (MOEP), said key drivers of energy demand through the first quarter of 2017 will be iron and smelting (2,000 MW), standard-gauge and light rail (1,171 MW), information communication and technology (ICT) parks (675 MW) and the Lamu Port.

The consortium won the contract against strong competition, including major companies from India, Japan, the U.S. and Europe. The consortium was chosen as one of three pre-qualified bidders in September 2013 from a list of 26 bidders.

"The Lamu coal power plant is integral to attaining the country's objective of increasing generation capacity and reducing the cost of power. The evaluation is a major vote of confidence for the capacity of reputable local companies to lead, fund and own the development of large infrastructure projects within the country in partnership with experienced world class companies," said Centum Chief Executive Officer James Mworia.

"The consortium includes two wholly owned subsidiaries of PowerChina, a Fortune 500 company with vast experience in power project development, having installed in excess of 43,000 MW worldwide in nuclear, coal thermal and hydro, including the Three Gorges Dam, which is the world's largest hydro-power dam," said Mworia.

The Lamu plant will be the largest power generating plant in East, Central and Southern Africa (excluding South Africa), and will account for about 55% of Kenya's power production, based on current installed capacity.

"When the Lamu plant is introduced in the 'Least-Cost Power Development Plan," the effect will be to electrify communities, spur and enhance industry and create a notable number of jobs to significantly impact youth unemployment," said Gulf Energy Chief Executive Officer Francis Njogu. "The project will create several thousand direct jobs during construction and indirect jobs in several multiples of thousands."

The winning consortium will also be expected to build a 400-kilovolt (kV) switchyard next to the plant to connect to a power line, to be built by the Kenya Electricity Company.

About $500 million for the project will be funded by equity and about $1.5 billion will be funded through debt, the consortium leaders said.

For related information see July 1, 2014, article--Kenya sees more than $4.5 Billion in World Bank, EU Funding for Energy Infrastructure.

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