Jubilee's White Coal Elephant

[wanyee]

The Proposed Lamu Coal Power Plant

This "white elephant" is based on inflated projections, in order to justify its construction.

According to Hindpal S. Jabbal, an authority on Kenya's power sector and a former chairman of the Energy Regulatory Commission (ERC), Kenya's GDP has grown by about 5.4 per cent over the past three years, and demand for electricity by about 6 per cent.

This is against the highly exaggerated projections of 10 per cent and 15 per cent, respectively, which inform the plan.

Furthermore, in the period since the project was launched, almost 650 megawatts (MW) — 400MW of geothermal power and 250MW from three medium-speed diesel (MSD) thermal plants (one at Thika and two at Athi River) — have been added to the national grid. Yet, peak demand over this period has increased by only 232MW, despite Kenya Power connecting 2.6 million new customers to the grid.

Thus, the 250MW MSD plants installed by three different independent power producers (IPPs) have virtually become redundant, yet they attract close to $60 million (Sh6 billion) a year in idle capacity charges.

This has resulted in an electricity tariff increase of about Sh1/kWh, which was passed on to customers in 2014.

It is very likely that power costs could increase by another Sh3-Sh4/kWh if the 1,000MW Lamu Coal Plant project goes ahead as planned.

This plant, estimated to cost about $2 billion (Sh200 billion), will attract idle capacity charges of about $360 million (Sh36 billion) a year. Therefore, its construction cannot be justified for the next 14 years to 2030 for lack of adequate demand to operate the plant economically at base-load.

(Ref: www.standardmedia.co.ke/mobile/amp/article/2000211395/we-can-t-blame-others-for-high-cost-of-electricity-if-we-fail-to-plan-properly?pageNo=1)

It is also worth noting that NO country in the world has ever had a coal plant, WITHOUT exploiting its own coal reserves. The coal that will be used to power the Lamu coal plant will be imported from South Africa.

Last, but certainly not least, it goes without saying that a coal plant in such an ecologically sensitive area as Lamu - the oldest Swahili settlement on the East African Coast and a UNESCO Heritage site - will face serious health and environmental impacts.

See also: Lamu residents oppose Sh200bn coal power project - Daily Nation www.nation.co.ke/counties/lamu/Lamu-coal-power-project-demo/3444912-3478004-shf5fg/

www.madaraka.net

[wanyee]

Kenyans at loggerheads over coal plant at world heritage site

mobile.reuters.com/article/idUSKBN14P1U5

See also:

www.madaraka.net

[kamalet]

Dec 7, 2016 22:15:52 GMT 3 wanyee said:

The Proposed Lamu Coal Power Plant

This "white elephant" is based on inflated projections, in order to justify its construction.

According to Hindpal S. Jabbal, an authority on Kenya's power sector and a former chairman of the Energy Regulatory Commission (ERC), Kenya's GDP has grown by about 5.4 per cent over the past three years, and demand for electricity by about 6 per cent.

This is against the highly exaggerated projections of 10 per cent and 15 per cent, respectively, which inform the plan.

Furthermore, in the period since the project was launched, almost 650 megawatts (MW) — 400MW of geothermal power and 250MW from three medium-speed diesel (MSD) thermal plants (one at Thika and two at Athi River) — have been added to the national grid. Yet, peak demand over this period has increased by only 232MW, despite Kenya Power connecting 2.6 million new customers to the grid.

Thus, the 250MW MSD plants installed by three different independent power producers (IPPs) have virtually become redundant, yet they attract close to $60 million (Sh6 billion) a year in idle capacity charges.

This has resulted in an electricity tariff increase of about Sh1/kWh, which was passed on to customers in 2014.

It is very likely that power costs could increase by another Sh3-Sh4/kWh if the 1,000MW Lamu Coal Plant project goes ahead as planned.

This plant, estimated to cost about $2 billion (Sh200 billion), will attract idle capacity charges of about $360 million (Sh36 billion) a year. Therefore, its construction cannot be justified for the next 14 years to 2030 for lack of adequate demand to operate the plant economically at base-load.

(Ref: www.standardmedia.co.ke/mobile/amp/article/2000211395/we-can-t-blame-others-for-high-cost-of-electricity-if-we-fail-to-plan-properly?pageNo=1)

It is also worth noting that NO country in the world has ever had a coal plant, WITHOUT exploiting its own coal reserves. The coal that will be used to power the Lamu coal plant will be imported from South Africa.

Last, but certainly not least, it goes without saying that a coal plant in such an ecologically sensitive area as Lamu - the oldest Swahili settlement on the East African Coast and a UNESCO Heritage site - will face serious health and environmental impacts.

See also: Lamu residents oppose Sh200bn coal power project - Daily Nation www.nation.co.ke/counties/lamu/Lamu-coal-power-project-demo/3444912-3478004-shf5fg/

www.madaraka.net

Two untruths:

The tariff increase was price review for KPLC as last review was many years ago and not because of idle IPP generators.

The importation of coal from SA is short term as the coal mining in Kitui comes through - the reserves in Kitui have been determined as sufficient for the long term.

As regards the coal plant and environmental concerns - this is nothing but an elitist view of the environment. The plant will not generate as much power as the power stations just outside OR Tambo airport which are coal powered!

[podp]

Jan 9, 2017 14:24:54 GMT 3 kamalet said:

Dec 7, 2016 22:15:52 GMT 3 wanyee said:

The Proposed Lamu Coal Power Plant

It is very likely that power costs could increase by another Sh3-Sh4/kWh if the 1,000MW Lamu Coal Plant project goes ahead as planned.

Two untruths:

The tariff increase was price review for KPLC as last review was many years ago and not because of idle IPP generators.

The importation of coal from SA is short term as the coal mining in Kitui comes through - the reserves in Kitui have been determined as sufficient for the long term.

As regards the coal plant and environmental concerns - this is nothing but an elitist view of the environment. The plant will not generate as much power as the power stations just outside OR Tambo airport which are coal powered!

it goes without saying that Kenya could do with all generation sources that it can muster.

Jubilee government started on a high note af adding 5,000+ MW of electricity to what was already there. however along the way the stealing frenzy saw to it that instead of staying the course of increasing generation quick 'eats' like buying electric poles and wires took the better part in the so called 'street lighting and the Last Mile initiative'. it is no brainer that tenderpreneures prefer buying poles and wires which they can be paid in less than a month after delivery rather than invest in generation.

fruits of this blundering can be seen from daily power outages, sometimes paralysing more than 2 former provinces simultaneously e.g. Frequent power blackouts have seen many businesses install standby generators that come on during supply cut-offs, raising their operating costs. www.businessdailyafrica.com/Nairobi--Mount-Kenya-and-Coast-region-hit-by-blackout/539546-3510776-14wpp7hz/index.html

no wonder sometimes last year "Perhaps a more plausible beef would be the frequent power outages? I await their rebuttal. The article also exposes Jubilee Government's oft-touted claim that power cost has gone down by 30% instead of 10%?." to the article www.standardmedia.co.ke/business/article/2000211395/we-can-t-blame-others-for-high-cost-of-electricity-if-we-fail-to-plan-properly

the same critic had this to say 'The Ministry of Energy (MoE) launched the latest Investment Prospectus (covering 2013-2016) which is for installing 5,000+ MW generation capacities before 2017. In the prospective, the MoE proposes that approximately 1,500 MW will be from geothermal sources, 500 MW will be from wind, 2,000 MW will be coal-fired, and 1,000 MW will be from a liquefied natural gas (LNG) plant. While the system can comfortably absorb the proposed geothermal and wind plants over the next ten years, as shown in the above tentative LCPDP, the 2,000 MW coal-fired and 1,000 MW LNG plant cannot be justified on technical or economic grounds nor, due to lack of adequate demand, can the system absorb them.' www.kenyaengineer.co.ke/dev/index.php/features/item/2389-creating-unnecessary-capacity-a-special-report-on-kenya-s-power-sector

1st red high light
many months ago the DPORK made it clear to Energy Regulatory Commission that no tariff hike was to be tolerated. "In Summary: The saga of electricity tariffs is but a reflection of what should be expected as the major centres of power in the electricity sector start shifting. What confounded the energy industry most was Mr Ruto’s style and manner of delivering the message
Mr Ruto simply summoned top ministry of Energy officials, top officials of ERC and the CEO of Kenya Power, Mr Joseph Njoroge, to his office one afternoon and declared that electricity prices would not be revised upward. Politically, Mr Ruto’s move was a masterstroke. With a new administration having romped into town promising goodies, allowing an increase in electricity tariffs in these early stages of the Kenyatta administration was going to disrupt the honeymoon it was enjoying"

www.nation.co.ke/News/Tariff-freeze-order-pushes-Kenya-Power-into-a-tight-corner/-/1056/1856666/-/10p0mpb/-/index.html

2nd red high light

here I agree with you. in USA for example 45% of their electricity is from coal. in South Africa in excess of 85% of their electricity is from coal. in Germany with all their sing song of renewables in excess of 44%. so Kenya should not shy away from generating electricity from coal if we wish to industrialise.

what is fatally wrong with our Lamu planned coal power plant is that no where on earth has any country build coal power plants away from the source. hence the correct place to locate the coal power plant is in Mui basin in Kitui county where abundant coal sources are located. we need to find a way of dealing with our 'aristocrats' namely the Kenyatta, Moi, Kibaki, Odinga etc. families who will not hesitate to Riek Machar versus Silva Kir us if we continue letting them ride rough shod over us.

just because the Kenyatta family is involved in the Lamu coal and Kwale gas power plants common sense in power generation is being abandoned to prove the prophesy of Hindpal that makes the current incompetent Cabinet Secretary for Energy parrot 'Energy Cabinet Secretary Charles Keter said having such huge capacity and in the absence of enough consumers would have resulted in the existing consumers shouldering the burden of paying to sustain the power stations which would have been rendered idle. “When you have the equipment running, you have to bill for maintenance and this pushes up the cost of power. If we introduce more capacity, it means that power will be costly because the demand is not there,”.'
Read more at: www.standardmedia.co.ke/business/article/2000229172/demand-setback-now-puts-kenya-s-mega-power-plan-on-the-back-burner

[kamalet]

Jan 9, 2017 21:30:37 GMT 3 podp said:

Jan 9, 2017 14:24:54 GMT 3 kamalet said:

Two untruths:

The tariff increase was price review for KPLC as last review was many years ago and not because of idle IPP generators.

The importation of coal from SA is short term as the coal mining in Kitui comes through - the reserves in Kitui have been determined as sufficient for the long term.

As regards the coal plant and environmental concerns - this is nothing but an elitist view of the environment. The plant will not generate as much power as the power stations just outside OR Tambo airport which are coal powered!

it goes without saying that Kenya could do with all generation sources that it can muster.

Jubilee government started on a high note af adding 5,000+ MW of electricity to what was already there. however along the way the stealing frenzy saw to it that instead of staying the course of increasing generation quick 'eats' like buying electric poles and wires took the better part in the so called 'street lighting and the Last Mile initiative'. it is no brainer that tenderpreneures prefer buying poles and wires which they can be paid in less than a month after delivery rather than invest in generation.

fruits of this blundering can be seen from daily power outages, sometimes paralysing more than 2 former provinces simultaneously e.g. Frequent power blackouts have seen many businesses install standby generators that come on during supply cut-offs, raising their operating costs. www.businessdailyafrica.com/Nairobi--Mount-Kenya-and-Coast-region-hit-by-blackout/539546-3510776-14wpp7hz/index.html

no wonder sometimes last year "Perhaps a more plausible beef would be the frequent power outages? I await their rebuttal. The article also exposes Jubilee Government's oft-touted claim that power cost has gone down by 30% instead of 10%?." to the article www.standardmedia.co.ke/business/article/2000211395/we-can-t-blame-others-for-high-cost-of-electricity-if-we-fail-to-plan-properly

the same critic had this to say 'The Ministry of Energy (MoE) launched the latest Investment Prospectus (covering 2013-2016) which is for installing 5,000+ MW generation capacities before 2017. In the prospective, the MoE proposes that approximately 1,500 MW will be from geothermal sources, 500 MW will be from wind, 2,000 MW will be coal-fired, and 1,000 MW will be from a liquefied natural gas (LNG) plant. While the system can comfortably absorb the proposed geothermal and wind plants over the next ten years, as shown in the above tentative LCPDP, the 2,000 MW coal-fired and 1,000 MW LNG plant cannot be justified on technical or economic grounds nor, due to lack of adequate demand, can the system absorb them.' www.kenyaengineer.co.ke/dev/index.php/features/item/2389-creating-unnecessary-capacity-a-special-report-on-kenya-s-power-sector

The ambitious 5000MW plan in the manifesto has been found to be grossly overstated and current capacity requirements are lower than this. The power outages are not 'exactly daily' or as frequent as you suggest. In 2016 if my recollection serves me right there were 3 national outages and the one we had yesterday was inconveniently long lasting 4 hours in my office and 5 hour at my house. But I prefer the optimistic view of things and acknowledge that there are many more Kenyans with access to electricity than there were prior to 2013 - and this is despite my frustration that they are yet to electrify my mother's house!

Jan 9, 2017 21:30:37 GMT 3 podp said:

1st red high light
many months ago the DPORK made it clear to Energy Regulatory Commission that no tariff hike was to be tolerated. "In Summary: The saga of electricity tariffs is but a reflection of what should be expected as the major centres of power in the electricity sector start shifting. What confounded the energy industry most was Mr Ruto’s style and manner of delivering the message
Mr Ruto simply summoned top ministry of Energy officials, top officials of ERC and the CEO of Kenya Power, Mr Joseph Njoroge, to his office one afternoon and declared that electricity prices would not be revised upward. Politically, Mr Ruto’s move was a masterstroke. With a new administration having romped into town promising goodies, allowing an increase in electricity tariffs in these early stages of the Kenyatta administration was going to disrupt the honeymoon it was enjoying"

www.nation.co.ke/News/Tariff-freeze-order-pushes-Kenya-Power-into-a-tight-corner/-/1056/1856666/-/10p0mpb/-/index.html

the tariff increase did go through and a more recent request was turned down - I am sure due to the impending elections than the economic reasoning that would inform the need for an increase!

Jan 9, 2017 21:30:37 GMT 3 podp said:

2nd red high light

here I agree with you. in USA for example 45% of their electricity is from coal. in South Africa in excess of 85% of their electricity is from coal. in Germany with all their sing song of renewables in excess of 44%. so Kenya should not shy away from generating electricity from coal if we wish to industrialise.

what is fatally wrong with our Lamu planned coal power plant is that no where on earth has any country build coal power plants away from the source. hence the correct place to locate the coal power plant is in Mui basin in Kitui county where abundant coal sources are located. we need to find a way of dealing with our 'aristocrats' namely the Kenyatta, Moi, Kibaki, Odinga etc. families who will not hesitate to Riek Machar versus Silva Kir us if we continue letting them ride rough shod over us.

Positioning of the power plant in Lamu was driven by the needs of LAPSET than anything else though one may question the economic sense of coal transport from Kitui to Lamu versus electricity transmission from Kitui to Lamu. That would be a nice one to get from the experts!

Jan 9, 2017 21:30:37 GMT 3 podp said:

just because the Kenyatta family is involved in the Lamu coal and Kwale gas power plants common sense in power generation is being abandoned to prove the prophesy of Hindpal that makes the current incompetent Cabinet Secretary for Energy parrot 'Energy Cabinet Secretary Charles Keter said having such huge capacity and in the absence of enough consumers would have resulted in the existing consumers shouldering the burden of paying to sustain the power stations which would have been rendered idle. “When you have the equipment running, you have to bill for maintenance and this pushes up the cost of power. If we introduce more capacity, it means that power will be costly because the demand is not there,”.'
Read more at: www.standardmedia.co.ke/business/article/2000229172/demand-setback-now-puts-kenya-s-mega-power-plan-on-the-back-burner

I am not sure how you were able to get the Kenyatta family involved in the Lamu power project. My reading is the project is by Amu Power Company is a consortium involving Centum, Gulf Energy and Chinese investors.

[podp]

Jan 10, 2017 8:38:16 GMT 3 kamalet said:

Jan 9, 2017 21:30:37 GMT 3 podp said:

it goes without saying that Kenya could do with all generation sources that it can muster.

the tariff increase did go through and a more recent request was turned down - I am sure due to the impending elections than the economic reasoning that would inform the need for an increase!

Jan 9, 2017 21:30:37 GMT 3 podp said:

2nd red high light

here I agree with you. in USA for example 45% of their electricity is from coal. in South Africa in excess of 85% of their electricity is from coal. in Germany with all their sing song of renewables in excess of 44%. so Kenya should not shy away from generating electricity from coal if we wish to industrialise.

I am not sure how you were able to get the Kenyatta family involved in the Lamu power project. My reading is the project is by Amu Power Company is a consortium involving Centum, Gulf Energy and Chinese investors.

While “5,000+ MW” and the Obama administration’s “Power Africa Program” in Kenya were independently conceived, they are aligned in their goals and to some extent in their timelines as well (http://www.usaid.gov/powerafrica/partners/african -governments/kenya).

Investment Opportunities
Although the 5000+ MW program is now seen as aspirational, the objectives provide an important signal to the market. Principal among these objectives is to increase geothermal and wind capacity and energy production by a significant amount, and increase the thermal capacity base through the use of natural gas or coal by 1000 MW to 2000 MW. The majority of the 5000 MW will be developed by IPPs through the PPP Act 2013.

www.usaid.gov/sites/default/files/documents/1860/Kenya%20_IG_2015_05_03.pdf

the above was just after Obama regime launched the Power Africa initiative and for a while the offices were located in Nairobi before being moved to South Africa. companies like GE were very keen to grow wind energy however for some unexplained reasons GoK preferred the firms associated now with the Mugo Kibati formerly the CEO of Vision 2030 delivery secretariat and now Chairman of Lake Turkana wind company that is building 300 MW capacity

there are some causation that may only be explained if PORK is directly involved through family, friends and proxy just like it is difficult to imagine Kafura of NYS carting money without Waiguru's knowledge who in turn would not have been a CS not serving PORK's interests. how does one explain how two Principal Secretaries both hailing from Gatundu, the PORKs backyard happen to straddle both Energy and Petroleum like colossuses? would it be because there are no other Kenyans clever enough to run the Energy and Petroleum ministry or just plain vested interests on PORK's family, friends and proxies?

another causation is the similarity with how the Energy Bill 2016 is yet to be signed into law, just like the Mining Bill overstayed witnessing change from Balala to the greenhorn from Kilifi one Kazungu yet it would have streamlined many matters in energy sector. did Chirchir's departure pave a way for another greenhorn, Keter

by law, the ERC operates independently from political influence, however in most developing countries the regulators have to serve the interests of CEOs appointing authorities.

another causation is the similar tones KQ management is taking to the IPPs having to come up not through Energy Act but PPP Act

we all know that " Kenya learned, over successive tender rounds, how to build capacity to design and run effective tenders. Competitive tenders for new power need to be initiated in a timely manner. It can take a year or more to run a competitive tender, and longer to reach finan- cial close, and even longer to construct the plant. Hence, there need to be clear plans for when power is needed and a realistic timeline for its procurement."

openknowledge.worldbank.org/bitstream/handle/10986/23970/9781464808005.pdf?sequence=2

however the way Jubilee has been running the show for the past 4 or so years negates the above unless one belongs to PORK's family, friends and proxy circles!

just as Governor Joho of Mombasa county has stated that those projects e.g. footbridge over some road, PORK has been flagging of do not belong to Jubilee, so too is "the national energy policy of 2004 (Government of Kenya 2004), which included an action plan for the period 2004–07 that set out the government’s commitment to:
• Establish a rural electrification authority.
• Facilitate the development of a competitive market structure for the generation, distribution, and supply of electricity.
• Establish the GDC to undertake an assessment of Kenya’s geothermal resources, including steam-field appraisal and development.
• Enact new legislation to, among other things, dissolve the ERB and create a new energy sector regulator—the Energy Regulatory Commission (ERC).
• Accelerate the increase in the rural electrification rate by 10 percent a year.
• Partially privatize KenGen through an initial public offering of 30 percent of its equity through the Nairobi Stock Exchange."

openknowledge.worldbank.org/bitstream/handle/10986/23970/9781464808005.pdf?sequence=2

Kenya’s 2030 Vision (encompassing social and economic goals) set a new generation target of 23,000 MW by 2030.

and this is where Jubilee has proven to be a stumbling block downsizing the initial plans by coming up with the 5,000+ MW for initially 2013 to 2017 and now not even maintaining the initial planning tools like the Least Cost Power Development Plan that stopped with the 2013-2033 not being released hence we still only rely on 2001-2031 and much earlier 2009-2029. "a number of generation projects have been procured through direct negotiations, and without a thorough technical and financial analysis to determine whether the proposed plants meet least-cost planning standards."

openknowledge.worldbank.org/bitstream/handle/10986/23970/9781464808005.pdf?sequence=2

"The rollout and subsequent scaling back of the 5,000+ MW program sheds light on how planning and procurement are handled in the nation, as well as the role that the private sector has played and will continue to play. The LCPDP does not identify any explicit criteria for the allocation of new build opportunities, a common challenge in hybrid markets. When KenGen is unable to finance new investments, the private sector is invited to participate. Typically, bids for IPPs are requested by the KPLC, and winners selected via a competitive process, although in some cases (such as for the emergency thermal generators required in 2000 and 2011, and tenders for large LNG and coal plants in 2014) procurement has been handled by the government directly or through its appointed agent, KenGen."

here is when matters get interesting and again point to vested interests.

"With the exception of Kipevu I, all diesel projects, public and IPP alike, have met their availability target; however, IPPs with diesel projects have outper- formed their public sector equivalents....While data on plant availability demonstrate the technical superiority of IPPs over KenGen, electricity prices offer a more nuanced picture."

why would one ask, would a government be happy to pay 'private individuals' higher electricity price (22 cts per kW) while shortchanging public utilities?

"this system explains part of the cost difference when Rabai is compared with the Tsavo IPP and KenGen’s Kipevu I and Kipevu III plants, also located in Mombasa. Thika Power and Gulf IPP have heat-recovery systems as well, but these plants are located up-country, near Nairobi, and must pay the additional fuel cost for transportation from Mombasa (about 500 kilometers, km). Iberafrica, located in Nairobi, must also pay an additional cost, and has technology similar to that of KenGen’s plants and the Tsavo IPP."

it gets interesting if only PORK's family, friends and proxies are in the picture! if the 5,000+ MW had stayed on course "Private participation in generation is not new to Kenya; what is new, how- ever, is the anticipated scale. Until recently, private power played a subsidiary role....But it is expected to play the lead."

I am still trying to figure ou why..."There are well-recognized links between the transparency of procurement processes, price outcomes, and the sustainability of projects. Prices have generally declined since the first IPPs were procured, which signals the merits of private power and increased competition. Thermal IPPs demonstrate superior technical performance relative to KenGen’s plants with similar technologies. Pricewise, KenGen’s projects appear to be more competitive, though the least expensive thermal is an IPP. A direct comparison between public projects (KenGen’s plants) and private projects (IPPs) is clouded by the fact that their respective costs of capital have been different."

openknowledge.worldbank.org/bitstream/handle/10986/23970/9781464808005.pdf?sequence=2

contrast with "Biojoule Kenya sells the power to Gorge Farm and to Kenya Power for $0.10 per kilowatt hour (kWh). Diesel-generated power, by contrast, costs $0.38 per kWh to produce." www.the-star.co.ke/news/2017/01/10/kenyan-firm-becomes-africas-first-biogas-powered-electricity-supplier_c1485325

[wanyee]

Kenya: Women Step Up Fight for Land Destined for Coal Mine

www.madaraka.net/?p=1639

[wanyee]

Excerpt:

"In 2013, the Jubilee Government announced an ambitious plan to produce additional 5,000 megawatts of electricity in a period of 40 months ending this year.

This saw economists warn that the economy would end up with a more-than required surplus and saddle consumers with a Sh61 billion idle capacity charges burden every year.

They reckoned that Kenya lacks the capacity to absorb such massive amounts of electricity given the sluggish rate of economic growth, delays in rolling out Vision 2030 projects and a poorly performing manufacturing sector.

“The power plants will remain totally redundant for several years, attracting almost $600 million (Sh61 billion) per annum in idle capacity charges,” Mr Jabbal said in a 2014 report titled Review of Kenya’s Power Sector (1998-2013) and Its Future (2013-2023).

SOURCE: www.nation.co.ke/business/Kenya-in-the-dark-over-perfect-power-mix/996-3830352-v7gyra/index.html

---

See also:

Coal-fired plant gets greenlight from ERC

SOURCE: www.nation.co.ke/business/Coal-fired-plant-gets-greenlight-from-ERC/996-3830384-kuoyo5/

www.madaraka.net