Kenya Selects Tata, Sinohydro Among 22 Bids for Power Plants

Kenya selected 22 bidders to compete for the development of a 960-megawatt coal-fired power plant and a 700-megawatt natural gas-powered facility in the east of the country, Energy Secretary Davis Chirchir said.

China’s Sinohydro Group Ltd. (601669) and Shanxi International Electricity Group, along with Toyko-based Mitsui & Co., are among 10 bidders that received tender documents from the government for the coal project, Chirchir told reporters today in the capital, Nairobi. Twelve contenders including a group led by Samsung C&T Corp. of South Korea as well as China Petroleum Pipeline Bureau are competing for the gas plant, he said.

Tata Power Co. (TPWR) of India, Toyota Tsusho Corp. based in Japan, and Aldwych International of the U.K., either alone or in a consortium, pre-qualified to bid for both contracts, according to an energy ministry statement handed to reporters.

East Africa’s largest economy wants to add more than 5,000 megawatts to the national grid by 2016 from 1,700 megawatts currently installed, according to the energy ministry, as the government targets doubling annual economic growth to 10 percent. The economy expanded 5.1 percent last year.

“We are seeking to make Kenya a low-cost economy,” Chirchir said. “We think these projects will help reduce the power tariff to about $0.09 per kilowatt hour” from about $0.15 currently, he said.

Build, Operate

The projects, based on a build, own and operate model, may each cost $2 billion to $3 billion, according to Chirchir. The ministry targets production from the gas plant in Mombasa county to start in 24 months, and six months later from the coal facility further north along the coast in Lamu county.

Bidders will be allowed to source coal on their own if the price is less than the amount distributors in South Africa and Zimbabwe are negotiating with the government, said Chirchir. Talks are at an “advanced stage” to secure gas from Qatar, he said.

The government is offering assurances that all of the power produced will be bought, Chirchir said.

To contact the reporter on this story: David Malingha Doya in Nairobi at dmalingha@bloomberg.net

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