Kenya is pressing on with plans to develop coal energy despite growing calls for governments across the world to scrap fossil fuels. This casts doubt on Kenya’s commitment to its own climate change strategy.
Data from the National Treasury indicates the Ministry of Energy has earmarked more than Sh2 billion for coal exploration and mining over the next three years.
In the current financial year, the ministry has allocated Sh559 million for coal power development and is requesting another half a billion shillings each for the next two financial years and Sh852 million in 2023.
The government is also developing a coal masterplan and feasibility report both scheduled for completion in 2023 detailing how the country will develop and integrate coal into the national grid.
This year, for example, the Geo-Exploration Directorate under the Ministry of Energy plans to construct 20 exploration wells, the first batch of 80 that will be constructed over the next three years.
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At the same time, the directorate has allocated resources for environmental assessment and stakeholder engagement towards building of the controversial Lamu Coal power plant.
This comes even as the National Environmental Tribunal last year cancelled the licence awarded to the consortium Amu Power Company to develop the Sh200 billion coal-fired plant.
In cancelling the licence, the tribunal ruled that the National Environment Management Authority (Nema) illegally approved Amu Power’s environmental impact assessment despite failure to meet adequate technical and public participation standards.
At the same time, the African Development Bank (AfDB), which was expected to fund the project, pulled out, stating that the bank is seeking more renewable energy investments.
“Coal is in the past, and renewable energy is the future,” said AfDB President Akinwumi Adesina last year at the UN General Assembly meeting on climate change. “For us at the African Development Bank, we’re getting out of coal.”
Impairment
The bank further unveiled a Sh50 billion green base-load scheme that will be kicked off later this year and is set to yield Sh500 billion of investment to help African countries transition from coal and fossil fuel to renewable energy.
However, both the Kenyan government and Amu Power consortium have vowed to press on with the project that also includes Gulf Energy and China’s Investment and Power Construction Corporation.
Last month, Centum, the major investor in Amu Power, revealed that the company had made a Sh2.1 billion impairment provision owing to stalled projects, with CEO James Mworia expressing optimism over its realisation.
“So far there are only two things that are pending: the environmental impact assessment (EIA) licence and the partial risk guarantees that the government will give the lenders of the project,” Mr Mworia told investors during Centum’s investor briefing last year.
Mworia further said the impairment had dampened the investment firm’s development portfolio, even as the firm reported Sh7.7 billion in profit after tax for the 2020 half-year period.
“By now these assets should have been on the exit path, not the impairment path,” he said. “Besides completing this development project we are not getting into any new development projects because what we’ve learnt is that it takes a lot longer and there are a lot of factors not in your control.”
The recent allocations to the energy ministry for coal development are the latest sign that the government and private sector intend to proceed with developing the 1,000MW plant.
Last year, the government spokesman Cyrus Oguna said the project will continue despite the ruling by the environmental tribunal because it is vital for the country’s energy development plans.
