Kenya to sign coal mining deal with China's Fenxi - CNBC Africa

Kenya to sign coal mining deal with China's Fenxi

East Africa

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Coal mining. PHOTO: Getty Images

The development is set for two blocks in the east of the African nation, a senior government official said.

Fenxi Mining Group had already been chosen to develop Blocks C and D, but disputes with locals in the mining area about compensation and relocation delayed the deal being finalised.

Kenya is hoping coal from the Mui basin, where Block C is estimated to contain a minimum of 400 million tonnes, will help save foreign exchange by reducing coal and oil imports.

"I could put it that maybe before the end of this month we should be able to sign the document," Energy and Petroleum Principal Secretary Joseph Njoroge told a news conference.

In October, Kenya invited bids to build a 900-1,000 MW coal power plant at Lamu, in a coastal region where the government wants to develop a 5.5 billion US dollars mega port that will link landlocked South Sudan and Ethiopia to the Indian Ocean.

In the 2011 agreement, the Energy Ministry said Fenxi Mining would pay the government 3 million US dollars for Block C and 500,000 US dollars for Block D, in return for a renewable concession of 21 years.

It will also allow the government to have an 11 per cent participation in the project, sharing gross revenues at a rate of 23.6 per cent for Block C and 21.1 per cent for Block D.

In addition to coal, Kenya plans to exploit natural gas and geothermal power to ramp up its power production to 5,000 MW by 2017 from some 1,664 MW at present.

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