Athi River Mining to join league of power vendors

• Listed firm to sell 19MW from its Sh4.2bn Kaloleni coal plant to KPLC

Cement firm Athi River Mining has joined an elite list of companies that are converting themselves from electricity buyers to power sellers.

Athi River Mining, which also manufactures fertiliser, is constructing a coal plant at Kaloleni with a capacity of 29 megawatts. This new business would be under the company’s new subsidiary — ARM Energy.

It will be the first cement firm to put up a power plant.

Speaking to reporters in Nairobi on Tuesday, ARM chairman Rick Ashley said of the 29MW produced, the company would sell 19MW to the Kenya Power and Lighting Company.

“But we will not use all of the remaining 10MW because we need a power buffer,” he said.

When the $55 million (Sh4.2 billion) project is completed in December 2011, the company would save on the Sh468 million it spends annually on power bills. Electricity expenses account for 30 per cent of the firm’s total operational bill.

Mr Ashley said talks were ongoing and he expects to sign a power purchase agreement with Kenya Power soon. The agreement is mainly on pricing.

“Once we have signed the agreement we will start off and by December 2011 the plant will be ready,” he said.

Importing

The company said it would be importing coal from South Africa, which it said is of high quality. Coal as a source of electricity has advantages compared to fuel-based sources in that it is relatively cheap and easier to extract.

Two months ago, Mumias Sugar Company started selling 26 MW from its co-generated power plant at $6 cents (Sh4.68) per kilowatt hour to KPLC.

The sugar miller is producing electricity by burning bagasse, the fibrous residue that remains when sugarcane is crushed.

Mr Ashley said the company was seeking to broaden its market share to 14 per cent by 2012 from the current 12 per cent.

This would come from increased production arising from expansion of its Kaloleni cement plant, which would be completed by January and the construction of a grinding plant at Athi River.

Managing director Pradeep Paunrana said there was rampant dumping of cement from Asia in Tanzania, where the company also operates.