Kenya invites international bids for coal mining

Kenya has floated a tender inviting international companies to explore coal in the east of the country as it seeks cheaper sources of power.

The two blocs A and B in the Mui basin are located 180 kilometres away from Nairobi and the Ministry of Energy has fixed July 16, 2012 as deadline for submitting expression of interest to explore coal to be used as source of generating cheap power.

Out of 15 wells drilled by the government in exploration areas A and B situated in Kitui County, 10 holes encountered coal at a depth of 11 metres (m) and 150m with fossil fuel thickness varying from 0.2 metres to 7m.

Energy Permanent Secretary Patrick Nyoike said companies interested in exploration area A covering 121.5 km² and B (117.5 km²) must demonstrate ability to raise over $200 million for investment.

“Areas A and B are open and are to be leased to prospective investors for possible exploration, exploitation, development and power generation from coal. A semi feasibility study has been done for each area,” he said.

Applicants must have audited balance sheets for the last three years with capital base of $100 million and annual turnover of over $100 million with ISO 9002 quality control system certification.

The firms are required to give certificate of incorporation, organisation structure, demonstrate effective environmental preservation and corporate social responsibility of projects undertaken at least in three developing countries.

Technical

Mr Nyoike said the applicants must also provide evidence of technical capability of undertaking projects with a daily output of at least 3,000 tons of coal and setting up of coal fired electricity generating plants.

“Where firms have come together in a joint venture, all members will be required to meet qualifications necessary to be invited to submit proposals,” he said. A joint venture agreement identifying lead partner will be required.

Fenxi Mining Industry Group of China was awarded in 2011 exploration areas C and D, and Parliament’s approval is required before coal production starts by 2014. Fenxi is required to pay Kenya concession fees of $3 million for exploration area A and $500,000 for area B.

“The government will have participating interest in the mining concessions with voting power,’’ said John Omenge, Chief Geologist at the Ministry of Energy last year

Fenxi agreed to give the government 11.6 per cent participating interest in exploration areas C and D. Kenya is entitled to get gross revenue share of 23.3 per cent from area C and 22.1 per cent from area D.