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Kenya to lease 31 coal blocks, as it eyes cheaper energy

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Peter Kithungía, a resident of the Mui Basin in Kitui County, points at the area covered by the Basin where Fenxi Mining Industry Company intends to start mining coal. Photo/SALATON NJAU

Peter Kithungía, a resident of the Mui Basin in Kitui County, points at the area covered by the Basin where Fenxi Mining Industry Company intends to start mining coal. Photo/SALATON NJAU  Nation Media Group

By Kennedy Senelwa Special Correspondent

Posted  Saturday, February 2   2013 at  16:20

In Summary

  • The acreage will be gazetted this month by the Ministry of Energy and the Ministry of Environment and Mineral Resources.
  • Coal is considered a cheap source of energy and the Ministry of Energy said if found to be commercially viable, some of the coal will be used in the cement and steel industries.
  • The government also hopes to use coal as a substitute for power from the national grid as one way of reducing the country’s reliance on electricity, which currently does not match demand.

Kenya is set to create 31 new coal exploration blocks this month to be leased to prospective investors through competitive bidding as the country pushes for diversification of energy sources to meet growing demand for power.

The acreage will be gazetted this month by the Ministry of Energy and the Ministry of Environment and Mineral Resources.

Two of the blocks — C and D, which are already mapped and leased out — are thought to have more than 400 million tonnes of coal reserves valued at Ksh3.4 trillion ($40 billion), according to estimates from the Ministry of Energy. The 31 new blocks are expected to have much more than this.

Coal is considered a cheap source of energy and the Ministry of Energy said if found to be commercially viable, some of the coal will be used in the cement and steel industries, which are estimated to be spending at least Ksh4 billion ($47 million) annually in coal imports.

Kenya spends at least Ksh14 billion ($160.9 million) annually on importation of 150 metric tonnes of coal.

Coal as a substitute

The government also hopes to use coal as a substitute for power from the national grid as one way of reducing the country’s reliance on electricity, which currently does not match demand.

Over-reliance on hydropower dams has in the past led to rationing during times of drought and the growing demand has stretched the infrastructure of state utility firms.

According to the National Energy Policy (Third Draft) released in May 2012, hydro generation contributes 48 per cent of Kenya’s total energy mix, geothermal 12.4 per cent; wind, 0.3 per cent; co-generation 2.4 per cent and thermal energy 37 per cent. Solar power is negligible.

The past three years have seen increased interest in exploration work from local and international firms after Kenya created blocks A, B, C, and D in the expansive Mui basin in Kitui county, east of Nairobi.

Nine foreign firms — Zhongmei Engineering Group; China National Electric Engineering Co Ltd; Avic International Holding Corporation jointly with CPI Power Engineering Co Ltd; Tata Power Company Ltd; JSW Energy Ltd; Madhucon Projects; Harbin Electrical International Co Ltd of China jointly with Coal Technology & Engineering Group Corp; Jindal Steel & Power Ltd; HTG Development Group Co Ltd with venture partners SEPCO Electric Power Construction Corporation and Shandong Province Bureau of Coal Geology — have already been shortlisted by the Ministry of Energy for rights to explore blocks A and B.

Exploration is likely to start before the end of this year once the awarding is ratified by parliament in line with the Constitution.

Industry players said the creation of new coal blocks is likely to lead to the discovery of commercial deposits in Kenya spurring manufacturing of fertilisers and chemicals such as sulphuric acid.

Compliance

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