Summary
- Consumers to pay hefty monthly bill regardless of whether it produces power or not
- Homes and businesses will pay the hefty bill for the 1,050-megawatt plant through their monthly bills to cover the developers’ fixed expenses on the project.
- Besides the capacity charges, customers will also be billed separately for the cost of generating coal-fired electricity
Electricity consumers will pay a fixed charge of Sh37 billion
per year through their bills towards Lamu coal-fired power plant,
irrespective of whether it generates power or not.
The
Treasury’s latest budget policy statement indicates that $360 million
(Sh37 billion) will be paid yearly to the developers, Amu Power Company,
as “annual fixed capacity payments”.
The planned payout is Sh5 billion more than what it cost to build the 50km Thika superhighway.
Homes
and businesses will pay the hefty bill for the 1,050-megawatt plant
through their monthly bills to cover the developers’ fixed expenses on
the project, regardless of whether they generate electricity or not.
Besides the capacity charges, customers will also be billed
separately for the cost of generating coal-fired electricity (energy
charge), partly dependent on coal import costs.
“Located
in Manda Bay, the Lamu coal power plant is on a BOO (build-own-operate)
basis over a 25-year concession period,” the Treasury says in the 2018
budget statement.
Construction of the $2 billion (Sh206 billion) coal plant is yet to start after suffering delays since 2015.
Like
with the current fuel cost charges in power bills that compensate power
producers for fuel costs in generating electricity, consumers will
absorb global coal price fluctuations through the monthly pass-through
charges.
Highest charges
At Sh37 billion yearly, the Lamu coal plant will have the heaviest capacity charges among power projects in Kenya.
The
Energy ministry reckons that the coal plant, the first in East Africa,
would help diversify Kenya’s power mix and drive growth.
Construction of the plant was set to start in September 2015 and end in June 2017 but the developers suffered delays.
The Amu Power consortium includes Centum Investments and a group of Chinese companies.
A group of global organisations have discouraged Kenya from setting up the coal plant over environmental concerns.
The
European Union, Switzerland-based World Wildlife Fund and South
Africa-based Greenpeace Africa have both expressed their reservations
warning of likely health risks to the people and degradation of the
pristine ecosystem in the coastal Lamu town.
Power capacity
At
1,050 megawatts, the proposed coal plant is equivalent to 44 per cent
of Kenya’s current installed power capacity of 2,400 megawatts.
“Based
on best industry practice the size of each machine operating at base
load should ideally not exceed 10 per cent of base load, or five per
cent of peak demand (currently about 1,730 megawatts),” according to a
recent energy sector report on the coal plant.
Coal is
the most polluting of the major fossil fuels and is blamed for
greenhouse gases that stoke global warming, floods and rising sea
levels.
But officials from Amu Power Company, the
consortium that won the tender to build the plant, have continually
allayed the fears saying they have lined up tight and clean safety
technologies.
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