The Energy Regulatory Commission (ERC) has approved the construction of Kenya’s first coal-fired power plant in Lamu after rejecting objections to the project by a community-based organisation.
This means Amu Power Company Limited, a consortium including Centum Investments, is cleared to get a power generation licence that has been withheld since last year as the objections by Save Lamu Natural Justice were reviewed.
The ERC says the environmental, technical and economic issues raised by Save Lamu have been addressed.
“Taking the above reasons into account, the commission disallowed the objection. The above decision is based on the objects and mandate of the commission envisaged under section 5 (a) and powers under section 6 (c) and (e),” ERC said in a Kenya Gazette notice.
The regulator said the people affected by the project are not opposed to Amu being issued with a licence.
“Their only concern was a fair relocation and compensation, which is being undertaken by the government in liaison with the project affected persons,” said ERC in the notice.
ERC said all environmental concerns raised by Save Lamu will be addressed as the project is implemented. On technical matters, the regulator said the plant’s location is “appropriate” and that it will supply the coast region with sufficient power while helping to cut energy costs of transmission and technical losses.
The coal plant will also help to diversify the country’s energy mix and is supported by the government’s focus on least cost power, ERC said.
On the economic front, the project’s fuel price has been addressed in the power purchase agreement and livelihoods of the people of Lamu “has been addressed in the environmental social impact assessment”.
The regulator added that the project cost will be recovered through the tariff as contained in the power purchase agreement.
Amu has a power purchase agreement with electricity distributor Kenya Power, which will buy the coal-fired electricity at Sh7.7 (7.52 US cents) per kilowatt hour for onward sale to homes and businesses.
At Sh7.7 per unit, the electricity is 61.5 per cent cheaper than the Sh20 diesel-fired plants charge.