Kenya to Spend Up to $15 Billion Expanding Power Network

1 Nov

Kenya plans to spend as much as $15 billion boosting electricity production fourfold over the next 40 months to help accelerate growth in East Africa’s biggest economy, Energy Minister Davis Chirchir said.

The country plans to produce an additional 5,500 megawatts, mostly from coal, gas and geothermal sources, by 2017, Chirchir said in an interview yesterday in the capital, Nairobi. Added to existing capacity of 1,700 megawatts, that would bring total output to 7,200 megawatts, he said.

“We will need about $10 billion to $15 billion in investment to reach that target,” Chirchir said. “We need that power to support double-digit economic growth.”

Kenyan President Uhuru Kenyatta, who took office six months ago, pledged to accelerate annual economic growth to more than 10 percent as part of plan to create more than 1 million jobs a year. The country is preparing to sell its inaugural Eurobond to raise as much as $2 billion by early next year to fund infrastructure development.

Kenya is talking to suppliers of coal from South Africa and Zimbabwe to fuel a 900-1,000 megawatt plant at Lamu on the coast, for which they are in the process of procuring a developer. The ministry is also talking to Qatari suppliers of liquified natural gas for a 700-800 megawatt plant at Dongo Kundu in Mombasa, according to Chirchir.

The government plans to use competitive bidding tenders to award contracts for power generation to private companies, Chirchir said. “The criteria for selection will mainly be the tariff at which the companies propose to sell us the power they generate,” he said.

Kenyatta said in September the country plans to become more reliant on coal-fired, geothermal and natural-gas generation to lower costs by as much as six-fold. Of the total 5,500 megawatts that will be added, only 24 megawatts will be sourced from hydropower, according to the Energy Ministry.

The state wants to reduce the industrial cost of power to $0.09 per kilowatt hour from the current $0.15, Chirchir said.

BY David Malingha Doya in Nairobi at: http://www.bloomberg.com/news/2013-10-31/kenya-to-spend-up-to-15-billion-expanding-power-network.html

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