Keter, Amu shrug off Lamu coal setbacks

Activists outside the Supreme Court in Nairobi after the National Environmental Tribunal blocked the construction of Lamu coal power plant on June 26, 2019. AFP PHOTO | NMG Kenya has shrugged off the funding hitch and political headwinds facing its Lamu Coal Power plant and announced plans to steer the controversial project to its conclusion.

A day after the African Development Bank (AfDB) yielded to pressure from ‘clean energy activists and pulled out of the project, Energy Cabinet Secretary Charles Keter said the move “may only delay the project’s completion timeline”.

“AfDB was providing project finance guarantee and not directly funding the project. I believe the players will have to find an alternative guarantee to continue with the plan,” he told the Business Daily last week.

“We have been to similar challenges before if you remember even the World Bank pulled out of the Lake Turkana Wind Power Project but we still delivered it.”

Project financing guarantee is essential in major projects due to the uncertainties associated with the lengthy periods of return and the technologies involved. It paves the way for greater risk appetite by project funders.

The AfDB published an environmental and social impact assessment in May for the Lamu project, which is expected to have an installed capacity of 1,050 megawatts, before revealing last week that it would not be involved in the coal power plant deal.

The project, which is financed by Kenyan and Chinese investors, was originally planned to start in 2015 but has been facing various obstacles including a June 2019 environmental tribunal that halted it after activists petitioned against it.

Amu Power, which is a joint venture between Gulf Energy and Centum Investment, declined to comment on the project’s prospect following the AfDB move but insisted the private sector-led infrastructure project is still on course.

Amu Power Managing Director Francis Njogu told the Business Daily that the challenges were normal for “all big projects”.

“Big projects like this one will always face headwinds. This is not the end of the project but just a challenge to be overcome,” said Mr Njogu.

Last year, Amu Power signed a Sh50 billion deal with American Conglomerate General Electric to design, construct and maintain the Lamu coal power plant in a deal that would see the American firm take up shareholding in the Amu Power.Climate activists have heightened concerns about the impact of burning fossil fuels, particularly coal in a move that has led dozens of […]

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