China puts final nail on coffin for Lamu coal project

China puts final nail on coffin for Lamu coal project

Plans to revive talks surrounding the setup of a coal power plant in Lamu are virtually over after China’s flip.

While appearing at the United Nations General Assembly summit earlier this week, Chinese President Xi Jinping said China would stop building coal power plants overseas.

The pledge has technically scuttled plans for a coal power plant in Kenya whose potential funding was seen emerging from China after prospective financiers pulled out of the now damned project.

In flipping from its support for coal power plants which are regarded as dirty sources of energy, China has in essence stopped blowing hot and cold on the global push for sustainability and climate change mitigation.

Its pledge has been followed by applause from climate smart cheerleaders and activists who have termed the move as death to the coal industry.

“The coal industry all over the world is collapsing. All the pillars that used to hold it together have long decayed, and no country or investors anywhere in the world will be spared the BIG collapse. This move will spare the country the huge losses it would have faced in coal businesses abroad in the form of stranded assets,” said Prince Papa, Chairperson to the the deCOALonize Campaign Board.

Kenya had hoped to set up the 1050 megawatt (MW) coal plant which would be the largest and the region and the first in the country.

Chinese financiers including the Industrial and Commercial Bank of China (ICBC) were tipped to be the biggest financiers for the project.

Nevertheless, the project had for long been on its death bed with the African Development Bank (AfDB) and the European Investment Bank (EIB) both withdrawing their support for the plan in November 2019 citing a turn away from dirty fuels.

At the same time, Amu Power (a consortium behind the project and a subsidiary of the Centum Investment Group which holds a 51 per cent stake in the company) lost its environmental impact assessment (EIA) license in June of the same year.

In November 2019, Centum was forced to make a full provision for the project which rounded off to Ksh.2.1 billion as prospects for the coal project waned.

In September last year, General Electric (GE) which had an agreement with Amu Power for the design, construction and maintenance of power plant pulled out of the deal sending prospects for the project into further headwinds.

The shift of stance from China, seen as a likely financier and executor for the project is however likely the final straw for Kenya’s coal dreams.

Amu Power has previously been in talks to pull the project out of its now near-certain grave.


china Amu Power Lamu coal project

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