Reports: Lender out of Sh130b coal project
Steve Umidha @UmidhaSteve
The Industrial and Commercial Bank of China (ICBC) has reversed plans to finance the ambitious 1,050MW Lamu coal plant at the Kenyan coast on environmental and social risks, says a lobby.
Details emerging indicate that ICBC may not commit 60 per cent of the project’s $1.2 billion (Sh130 billion) total cost for the multibillion project, expected to be the largest coal plant in East Africa and a first in Kenya.
“While we are happy to hear this great news, we will continue our lobbying so that no new investor will be sought to fill the gap left by ICBC.
We want the project not just suspended, but cancelled entirely,” stated Khadija Shekuwe, Save Lamu Coordinator – a community lobby group.
The lobby had opposed the project through various petitions and complaints to ICBC, expressing concern over extensive environmental destruction and social risks that would be encountered once the project is operational.
Efforts to get comments from ICBC did not bear fruit as our emails to Jinny Yan managing director and lead principal went unanswered.
The Lamu coal plant project has also seen other investors pull out since the cancellation of NEMA licences, with the African Development Bank (AfDB) having announced in November 2019, it would pull out of the energy generation project.
Documents indicate that AfDB was to provide a partial risk guarantee for the project. Other potential investors included General Electric (GE) which announced in September it intends to shift its investment policy away from the new coal power market.
Public private partnership
Concerns abound the proposed plant will have direct and indirect impact on the environment, social and cultural damage to Lamu Old Town, concerns also backed by UNESCO.
The Lamu coal plant is part of the Lamu Port South Sudan-Ethiopia Transport (Lapsset) corridor and was to supply about 44 per cent of the country’s installed capacity of 2,400MW.
In 2018, Kenyan banks lost an opportunity to finance the coal plant project because they lacked the depth and tenor to fund large projects over an extended period since the Central Bank of Kenya (CBK) limits the amount banks can lend to a single project on the basis of their capital ability.
The proposed public-private partnership (PPP) is developed on a build-own-operate (BOO) basis by Amu Power, a special purpose joint venture of Centum Investments and Gulf Energy.