Kenya has selected a consortium led by China’s HCIG Energy Investment Company to develop a coal mining project after a previous attempt failed to produce a successful bidder.
HCIG Energy, in partnership with Liketh Investment Kenya, will carry out coal mining in Block A and Block B, in the Mui basin, in Kitui, about 180 km east of Nairobi.
The concession also provides for the construction of a coal-fired power plant that will use some of the coal to generate power for the mine’s consumption, for sale to the national grid and for the exploitation of coal-bed methane, if it is found.
The concession for Block C and Block D has already been awarded to another Chinese company, Fenxi Mining.
Projections by the Ministry of Energy indicate that Kenya has at least one-billion metric tonnes of recoverable coal in the four exploration blocks in the Mui coal basin.
Fenxi Mining, which was awarded the concession in 2011, has already committed to investing $500-million in the project and plans to start commercial production next year.
The HCIG Energy-led consortium will now be invited for negotiations on the finer details of the project.
Capital Base The consortium demonstrated during the bidding process that it had a capital base of $100-million and a yearly turnover of more than $100-million and that it was able to raise over $200-million to invest in the project.
The HCIG Energy consortium beat two other consortiums to win the tender. These were a consortium of Transcentury Investments, Continental Oil and Power Machines and a consortium of China Northeast Electric Power Engineering Corporation and China Coal Technology & Engineering Group.
Kenya is banking on coal for power generation as it seeks to increase electricity output to 5 000 MW by 2017.
Already, the East African nation is in the process of building a $2-billion coal-powered plant in Lamu that will generate 960 MW.