KenGen to build Sh27b gas facility

By Kelly Gilblom

Kenya Electricity Generating Company (KenGen) has announced plans to build a Sh27.2 billion ($320 million) liquefied natural gas importing and storage facility to boost power generation and end its frequent blackouts.

KenGen said it expected the project, located on the southeastern coast’s Dongo Kundu area, to be financed by a Private-Public Partnership, with a tender expected soon.

KenGen spokeswoman, Elizabeth Njenga, was quoted by Reuters as saying that she expected the facility to be ready for use by 2016 and would be used to fuel a $680 million LNG-fired power plant in nearby Mombasa, which is expected to be completed by the end of 2015.

Natural gas has become increasingly popular in recent years to produce electricity, replacing traditional sources such as coal.

LNG burns cleaner, and a huge supply boosted by major discoveries in neighbouring Tanzania means it may be cheaper too.

LNG-powered electricity production “is the cheaper of the fossil fuel fired power plants, much cheaper than coal and HFO (heavy fuel oils), and therefore very appropriately mitigates and complements our geothermal led capacity expansion strategy,” said Njenga.

Most of Kenya’s electricity is now generated by hydropower, though it hopes to boost production and connectivity to meet the country’s fast-growing electricity demand by taking advantage of gas finds.

US oil and gas explorer Apache Corporation encountered the first natural gas offshore Kenya in September, though that discovery by itself is not commercially viable, the Energy ministry has said.

Several other oil and gas exploration wells are planned in the coming year, with the next to begin offshore on December 13.

If other companies find enough gas to justify liquefying it for export, the new facility could help, according to KenGen.

 “We will develop the power plant to operate on imported gas, then switch to the use of local gas.

The import terminal could also be converted to an export terminal as we export the Kenyan gas to the neighbouring countries,” Njenga said.

The country does not yet have any private investors for the offshore LNG storage facility, though KenGen hired UK-based engineering firm Mott MacDonald to carry out a feasibility study, which is now complete.

Natural gas, because of its clean burning nature, has become a very popular fuel for the generation of electricity. In the 1970s and 1980s, the choices for most electric utility generators were large coal or nuclear powered plants. 

However, due to economic, environmental and technological changes, natural gas has become the fuel of choice for new power plants built since the 1990s. According to Energy Information Administration (EIA), natural gas-fired electricity generation is expected to account for 80 per cent of all added electricity generation capacity by 2035.