HomeRegional NewsEast AfricaDeal watch: Gulf Energy/Centum consortium wins 960 MW coal plant tender

Deal watch: Gulf Energy/Centum consortium wins 960 MW coal plant tender

Kenya has named a consortium led by local companies Gulf Energy and Centum Investment Company as the winners of a contract to develop the 960 MW Lamu coal power plant.

Local media had reported on Monday that Energy Principal Secretary Joseph Njoroge was planning to announce the successful bidder within two weeks, but hours later Gulf and Centum’s consortium was informed that it had secured the tender.

The consortium was among three pre-qualified final bidders that submitted proposals from an initial pool of 26 bidders that included large multinational players from India, Japan, the USA and Europe.

Kenyan-Chinese consortium

James Mworia, CEO of Centum, said in a statement: “The award is a major vote of confidence for the capacity of reputable local companies to lead, fund and own the development of large infrastructure projects within the country in partnership with experienced world class companies,”

Others in the Gulf & Centum consortium are Sichuan Electric Power Design and Consulting Company, Sichuan No. 3 Power Construction Company, both subsidiaries of Chinese energy giant PowerChina, and China Huadian Corporation Power Operation Company.

Mr Mworia added: “Our consortium includes two wholly owned subsidiaries of PowerChina, which is a Fortune 500 company with vast experience in power project development having installed capacity in excess of 43,000 MW worldwide in nuclear, coal, thermal and hydro including the Three Gorges Dam.”

The other two consortiums include Shanghai Electric Company and Avic International and Cistenique, and HCIG Energy Investments, which had planned to work with Liketh Investments Company.

Unfair decision

Shanghai Electric Company and HCIG Energy had raised concerns about the evaluation team making “funny excuses in siding with our competitor”, said a lawyer representing Shanghai Electric.

Evaluation committee chair Simon Ngure however maintained that that his team had done everything according to the law accusing the two firms of having their own hitches that may have brought about challenges in the final computation.

“The problem is that they introduced in our formula, a second number. We had only two parameters; one is on the fuel price and the other one is specific fuel consumption. And to get the fuel charge they gave us, they introduced a third number. It was not acceptable that they would introduce some number,” Ngure said, “Essentially what that number is doing is to change the specific fuel consumption.”

The Lamu 960 MW coal generation plant will cost approximately Sh177 billion (US$2 billion), of which approximately Sh44.2 billion (US$500 million) will be funded by equity and the balance will be funded through debt.

Francis Njogu, chief executive of Gulf Energy, said: “Once complete, the power plant will be the single largest power generating plant in East, Central and Southern Africa (excluding South Africa), and will account for approximately 55 per cent of Kenya’s power production measured by today’s installed generating capacity.”