Danish firm gets Comesa nod to buy thermal plant
Common Market for Eastern and Southern Africa (Comesa) Competition Commission has given Danish giant A.P. Moller Capital the nod to wholly own Thika Power Thermal Plant, signalling a surging appetite by independent power producers for a piece of the Kenyan market.
While the acquisition is still subject to confirmation by the Capital Markets Authority (CMA), this shines the spotlight on the Danish company which recently acquired IberaAfrica, another thermal power producer to increase footprint in the country’s energy sector.
Documents in our possession indicate that should the market regulators which includes the Competition Authority of Kenya assent to the buyout, the deal will be sealed through the Africa Investment Fund (AIF) Holdings, which are also the owners of the 52.5MW Nairobi-based IberaAfrica thermal power plant.
In its submission, the Competition Commission’s Committee Responsible for Initial Decisions (CID) said the acquisition was less likely to dampen competition in the sector.
“The CID determined that the merger is not likely to substantially prevent or lessen competition in the Common Market or a substantial part of it, nor be contrary to the public interest,” said CID, further stating that the transaction was unlikely to negatively affect trade between member states.
Thika Power Plant, is one of the independent power producers (IPP) supplying Kenya Power with 87MW of electricity in a contract that ends in 2034.
In Kenya, the company has an agency, AP Moller-Maersk, with companies that operate international and local container depots.
AP Moller enters the country’s electricity sector at a time the government is under pressure to reduce the high cost of electricity, partly blamed on expensive purchase agreements with the IPPs, a move that has seen authorities push for a review of the agreements.
It is on the basis of these existing contracts that resulted in Kenya Power paying Sh2.5 billion in the year to June 2020 for electricity supply, out of which Sh654 million was compensation for fuel used i n generating the power.
A.P Moller’s first foray in Kenya’s energy sector was in 2020, when the company forked out Sh6 billion to acquire IberAfrica from Naturgy, one of Kenya’s leading IPPs, as part of its efforts to invest in infrastructure assets including power and energy in Africa.
According to Lars Reno Jakobsen, Senior Partner at A.P. Moller Capital the entry into Kenya provided them with a platform to advance their business interests in Kenya through further investments in greenfield and brownfield power and energy infrastructure assets in Kenya.
“Kenya is one of our focus countries with its sizable, growing, and well diversified economy as well as its strategic location in East Africa,” he said then.
This development comes hardly a week after Developers BTE Renewables and Craftskills completed the 100MW Kipeto wind farm in Kajiado county. The project has now started delivering full power to the Kenyan grid.
With its 60 GE turbines, the wind farm is Kenya’s second largest, after the 310MW Lake Turkana project which was connected to the grid in January 2021 after sealing a 20-year power purchase agreement with Kenya Power.
Earlier this year, UK development finance institution CDC acquired a controlling stake in Quantum Power East Africa GT Menengai through its local energy firm Globeleq.