Kenya awards two coal blocks, plans power plant

Kenya has picked China's HCIG Energy Investment Company and Liketh Investments Kenya Ltd to develop two coal blocks in its Eastern region, the energy and petroleum ministry said on Tuesday.

The consortium will mine and process coal on blocks A and B within the Mui basin. The basin is sub-divided into four blocks, namely, A, B, C and D.

The deal will also include the construction of a coal-fired power plant using coal from the blocks and will sell surplus electricity to Kenya's national grid, the ministry said in a statement.

Another Chinese firm, Fenxi Mining Group, was in 2011 selected to develop blocks C and D within the Mui basin.

The east African nation is hoping that coal from the Mui basin, where block C is estimated to contain a minimum of 400 million tonnes, will help save foreign exchange by cutting import costs.

Some of the coal will go to the cement and steel industries, which import large volumes of coal, and the rest will be used for energy generation, helping to fill a gap that is usually filled by diesel-fired, thermal plants.

In September 2014 a consortium led by Kenyan firms Centum Investment and Gulf Energy won a government tender to build a 1,000-MW, coal-fired power plant in Lamu.

The two firms joined forces with Chinese 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, about $500 million of which to be funded through equity and the balance through debt.

Kenya wants to expand its electricity generation capacity by 5,000 megawatts (MW) by 2017 from about 2,152 MW now, to lower tariffs and cut costs of doing business.