State seeks investors in cheaper electricity

Investors have been invited to set up energy plants powered by coal and natural gas.

A notice calling for bids to set up the plants that appeared in one of the dailies on Monday indicated that the coal power plant will be located in Lamu while the natural gas plant will be built in Dongo Kundu, Mombasa.

CAPITAL INVESTMENT

Qualified investors will be required to construct the power plants, own and run them before the assets are eventually transferred to the government when all the capital in setting them up is recovered.

It will be based on a build, own and operate or build, own, operate and transfer.

The transfer would be carried out after the capital investment has been recovered, the tender notice said.

The aim is to generate 5,000 megawatts in the next 40 months starting last month. The government has been seen to be training its eyes on independent power generation investors. This could end overreliance on the Kenya Electricity Generating Company.

On Monday, cabinet secretary for Energy and Petroleum Davis Chirchir told the parliamentary committee on energy that the ministry wants independent power producers to produce cheap electricity for the next 40 months.

“Previously, special purpose vehicles were used to develop power hence government resources ended up in collaborative arrangements. He said the ministry wants independent power producers investors given the maximum price for the purchase of their power, said Mr Chirchir.

The coal power plant will generate between 900 and 1,000 megawatts.

The successful investor will import coal under an arrangement with the government.

COAL MINING

The country is yet to start mining coal even after studies carried out in 2009 revealed that one of the four blocks at the Mui basin in Kitui alone contains coal in excess of 250 million tonnes that can be used for power generation.

Last year, PanContinental Oil and Gas Company announced a discovery of natural gas in block L8 in the Indian Ocean.

This discovery is, however, insufficient to feed a natural gas power plant meaning that the investor in the anticipated 700 to 800 megawatts plant will rely on importing natural gas from Tanzania and Qatar.