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KenGen To Seek Investors For Gas-Fired Power Plant.Good or Bad idea?

Kenya’s electricity generating company, KenGen, plans to raise funds from private investors for a $686 million gas-fired power plant to run on imported liquefied natural gas (LNG), Managing Director Eddy Njoroge said on Friday.  KenGen, which relies largely on hydro power, said the plant would help meet growing demand for electricity and help prevent frequent blackouts in east Africa’s biggest economy. The blackouts, according to KenGen, are caused by generation shortfalls and an aging grid.

The company plans to raise the money for the project due  2015 by appealing to private investors, and also expects the government to contribute  Capital. To be based at the port city of Mombasa, the proposed plant will be fuelled by LNG processed at a facility located nearby and will reduce over-reliance on the more costly heavy fuel oil KenGen has resorted to during dry spells.

KenGen has not raised any funds yet  however,  the company is working closely with the private public partnership  on how to structure the project for implementation as a PPP project. Due to funding limitations, the Kenya government has in recent years relied on private public partnerships  for financing infrastructure projects. In such  instances, private entities and government both contribute capital for projects but unlike other arrangements, PPPs usually end up with the government as the owner of the asset.

Once in production, the plant may be aided by several large natural gas finds off the coast of Tanzania and Mozambique. Western companies announced finds of huge additional quantities of gas off the coast of Mozambique and Tanzania this week, cementing the future of east and southern Africa as a new supplier exporting LNG to energy-hungry Asia. KenGen said the LNG could also come from the Middle East and other parts of the world.

One of Kenya’s problem is her leaders relying heavily on the west for funding. The income generated on projects like these end up in private accounts instead of being used for operations. Kenya needs to look into domestic funding as well as find ways to use local resources available at our disposal. One of the alternatives to LNG is Natural Gas hydrate. Natural gas hydrates recovered from the Congo-Angola basin and Nigerian margins are options to look into.

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