Govt to sign coal mining deal with China's Fenxi by endmonth
10 December 2013, 08:40
Nairobi - The government expects to sign an agreement with China's Fenxi Mining Group before the end of December to develop coal mining projects on two blocks in the country, a senior government official said on Monday.
Fenxi Mining Group had already been chosen to develop Blocks C and D, but disputes with locals in the mining area about compensation and relocation delayed the deal being finalised.
Kenya is hoping coal from the Mui basin, where Block C is estimated to contain a minimum of 400 million tonnes, will help save foreign exchange by reducing coal and oil imports.
"I could put it that maybe before the end of this month we should be able to sign the document," Energy and Petroleum Principal Secretary Joseph Njoroge told a news conference.
In October, Kenya invited bids to build a 900-1,000 MW coal power plant at Lamu, in a coastal region where the government wants to develop a $5.5 billion mega port that will link landlocked South Sudan and Ethiopia to the Indian Ocean.
In the 2011 agreement, the Energy Ministry said Fenxi Mining would pay the government $3 million for Block C and $500,000 for Block D, in return for a renewable concession of 21 years.
It will also allow the government to have an 11 percent participation in the project, sharing gross revenues at a rate of 23.6 percent for Block C and 21.1 percent for Block D.
In addition to coal, Kenya plans to exploit natural gas and geothermal power to ramp up its power production to 5,000 MW by 2017 from some 1,664 MW at present.