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The ‘Pains and Gains’ of Lamu’s Mega Projects

Though Lamu County is positioning itself to become the next frontier for energy production in the country, companies and investors involved in the setting of the triad of projects are not happy about the myriad of “roadblocks” placed on their path by various stakeholders.

The proposed three power projects are namely; the 300 Megawatt Kenwind Power project in Bahari area in Mpeketoni, the 1500 Megawatt Amu Coal Project in Kililana area in the mainland and the 200 Megawatt Zarara Oil and Gas Project in Pate Island.

These three energy production projects plus the LAPSSET project are being viewed as an impetus behind a paradigm shift in the hitherto marginalized area and will debunk the narrative that the county is a backwater fishing and tourism outpost.

The investments by the companies are poised to make Lamu an economic and industrial zone spurred by the Lamu port which is considered to be the next logistics and transshipment hub in the coast besides Mombasa.

Though collectively the three projects once completed and operational will contribute at least 2,000 MW to the national grid once completed and  up and running, they  remain bogged down  by a host of issues.

These “roadblocks”range from  unresolved land issues to environmentalists’ concerns that remain a thorn to the investors skin.

“For instance,the Kenwind Project should be up and running but we continue running into headwinds especially from a fellow prospective company that has also been seeking land for a wind power project,” Susan Nandwa, a senior official from the power company told KNA in an exclusive interview in Lamu Island adding that Kenwind has had to deal with court cases brought forward by a competitor Cordison International.

Cordison International is a private renewable energy company that had sought to be allocated 11,000 acres of land  by the Lamu County government in 2009 but were denied the rights by National Land Commission because they did meet the legal threshold to operate at such a scale.

“Despite our best intentions to set up the Kenwind power project in Lamu since 2010, we have had no respite with a fellow competitor (Cordison International) taking us to court at every turn,” Nandwa says.

 

The latest is a Court of Appeal application lodged by Cordison International appealing a May 25th  2018 High Court decision dismissing its application to compel the National Land Commission (NLC) to approve its application for land lease in order to be able to invest in a wind power project in Lamu.

“It seems that at every turn despite getting approvals from the Lamu County government, the Energy Regulatory Commission (ERC) and the National Land Commission (NLC), we have had no respite in being allowed to operationalize our wind power project,” the Kenwind project official  stated.

 

Cordison in turn have accused the National Land Commission of favouring Kenwind and have thus resorted to lodging a flurry of court cases that has delayed the progress of the Kenwind Project.

She is however optimistic that once the Resettlement Action Plan is concluded by the end of the year, with the affected 375 farmers whose land is being targeted for the project being compensated, the project will kick off.

“Our affairs are in order and Kenwind is fully backed by the International Finance Cooperation (IFC) who will partly fund the Shs 23 billion project”, said Ms Nandwa.

 

On its side, Cordison International has accused the  NLC of refusing to execute the lease instruments as advised by the Lamu County government in accordance with the constitution, Land Act 2012 and the law and entering an approval for the rival firm instead.

Cordisons International also accuses the Director of Physical Planning of advertising and publishing a gazette of a Part Development Plan (PDP) for Kenwind which overlapped Cordisons’ PDP which had also been approved by the county government and gazetted on 5th of august 2016.

“Cordison International simply lack the capacity and backing of ERC, IFC and the county government to conduct the project and so far they have yet to satisfy terms that would enable them acquire a Power Purchase Agreement,” Ms Nandwa states.

A power purchase agreement (PPA) is a legal contract between an electricity generator (Kenwind) and a power purchaser (Kenya Power).

Lamu County Lands and Infrstructure CEC Fahima Araphat who also spoke to KNA stated that the county government was fully in support of the project and expressed optimism that despite the legal hurdles that Kenwind has experienced, the project will undoubtedly take off next year once the resettlement action plan is fully implemented.

 

These sentiments echoed by Lamu West MP Stanley Muthama who stated that the he fully backs the project as long as it compensates the affected farmers adequately.

“There has been a lot of back and forth over whether elected leaders support the Kenwind Project, but as long as no one is swindled out of their land and everyone who will be affected by the project is compensated we have no queries,” Muthama stated.

Kenwind has earmarked 3,200 acres of land in Baharini area in Mpeketoni for the project for which at least 375 farmers are likely to be resettled or compensated for their land that will be used for the project.

 

 

The 1,500 MW Amu Coal project which is set to be built in Lamu’s mainland area of Kwasasi area has been dubbed as a major cog in the wheel of  ushering  the country into an industrial age by its proponents who have maintained that all industrialized countries have done so with the aid of “cheap energy” otherwise dubbed by its critics as “dirty death” or simply coal.

Amu Power Company is a special purpose project company that is a joint venture between a leading privately-owned Gulf Energy Ltd (developer and co-sponsor) and Centum Investment a leading East African investment company which trades on the Nairobi Securities Exchange (co-sponsor).

“It is a fallacy to believe that the country is going to steer its way into the industrial revolution without cheap sources of energy. If you check all industrialized countries, coal has been a significant factor in their growth,” Amu Power Chief Operating Officer Cyrus Kirima told KNA.

According to Amu Power the Lamu Coal Fired Power Plant project is part of the Government of Kenya’s (GOK) blueprint for fast-tracked production of 5,000+MW of power, for transforming Kenya in 40 months as from September 2013.

 

The coal power plant project is part of the government’s initiative of producing 25,000MW of power by 2020.

As the country transitions into a middle-income economy by 2030, supply of adequate, reliable, and affordable energy is a key foundation.

LAPSSET Director General Mr. Silvester Kasuku has in the past stated that as the country transitions into a middle-income economy by 2030, supply of adequate, reliable and affordable energy is a key foundation.

“The anticipated increase in demand should be seen in light of the need to power on-going and future projects like; the Standard Gauge Railway, Konza Technopolis, Lamu port, LAPSSET Special Economic Zones, the crude oil pipelines, Steel smelting industry and the LAPPSET resort cities, all of which require reliable stable and affordable power,” Kasuku opines.

The Amu Power project which is the crowning jewel of the triad of projects has not lacked its fair share of critics ranging from conservationists to local disenfranchised politicians who have expressed concern over the way the project is being set up in the county.

Conservationist and Save Lamu Chairman Walid Ahmed who has been at the forefront of opposing the project questions the urgency with which the project is being pursued despite widespread opposition by Lamu residents.

“There has been a lot of double speak when it comes to the Amu Power project right from the President to the former and present governor and MCAs in the county with no one offering a clear cut answer as to why we should have the project in a world heritage site in the first place,” former Women Representative Shakila Abdalla states.

Among the local leaders, she has been the most outspoken critic about the project stating that the project is likely to set the county’s Blue Economy potential hundreds of years back.

These sentiments echoed by WWF Kenya Lamu coordinator John Bett who concurs that the project is likely to endanger marine and land wildlife.

“There is immense evidence supporting claims by environmentalists that the Amu coal plant if established is likely to do more harm to Lamu’s economy in the long run than the gains that will be made by electricity generation,” Bett states.

However, Amu Power Chief operating officer Cyrus Kirima states that the kind of power plant that will be set up in Lamu will be the most advanced and ecologically friendly.

The Ultra Super Critical Technology is  an advanced coal production technology that can deliver up to 49% efficiency rates, significantly higher than the global average of 33% that is common even in industrialized countries such as China.

Kirima tells KNA that this technology  will increase the power output, reduce emissions and fuel consumption.

He further adds that studies have shown that Ultra Super Critical technology has the same levels of emission as Natural Gas-Powered plants.

However his sentiments have been met with skepticism by conservationist and Lamu Cultural Promotion Group Secretary General Salim Mirji who says that the kind of technology that Amu Power Plant is proposing is only meant to hood wink Lamu residents into accepting the project.

 

“The Amu Power plant if allowed to take a grip of Lamu will be the end of Lamu’s fishing and tourism economy because all the effluence will be released both in the air and the sea,” Mirji says.

Mirji further states that Lamu’s tourism and agriculture will come under threat, and most activities such as farming, fishing and pastoralism are likely to be no more once the project takes off.

“We have been put in a very precarious situation where if we oppose the project we are being called oppositionists of progress and if we accept the project we will have doomed ourselves with coal and its poisonous effluences which will corrode the environment as well as our air,” Mirji states.

“The Ultra Super Critical Power Plant is the latest in coal power plant energy generation and it has been set up to ensure that no waste leaves the plant and there is very little effusions as evidenced by a recent stakeholders tour of the power plants in Malaysia and Turkey that have this technology,” Kirima states.

The ideas raise more qualms than calm among some leaders such as Mkomani Ward Representative Yahya Ahmed who says that the project right from the start has been mired in controversy besides the environmental concerns being raised.

 

“Kwasasi farmers who own the land on which the project will be set up can easily be duped and end up not being compensated at all because there is already a title deed owned by LAPSSET that no one, not even the National Land Commission is talking about,” Hindi Ward Representative Anab Hajj retorts.

The National Land Commission Chairman Dr. Mohammed Swazuri who spoke to KNA on phone has been adamant that the Kwasasi Farmers are likely to be facilitated through a land to land compensation deal whose date has yet to be established.

LAPSSET Director General Silvester Kasuku chose to remain mum about the Kwasasi land issue and advised that all land management and transfer issues are usually handled by the NLC.

Kwasasi Farmers Association chairman Abdulrahman Aboud voiced his dismay that there seems to be no clear solution in sight with the Amu Power Project top brass mum after 3 years with no end in sight over whether the compensation issue will be resolved any time soon.

However, Amu Power officials based in Lamu have expressed optimism that the land compensation issue will soon be resolved to pave way for the project.

The company’s PR consultancy firm, Africa Practice in a statement given to KNA on behalf of Amu Power stated that

“The potential of the Lamu coal power project to transform the lives of Lamu County residents and the country is limitless. 

The project will directly and indirectly create jobs through its initial KES. 200 billion investments that will go into the development phase as well as another set of jobs during execution and through the plants value chain. 

            During the construction phase, we estimate that a total of 1,761 direct jobs will be created for locals comprising of 1,590 Skilled and 171 semi-skilled labour. 

            During the lifetime of the project, it will produce significant direct and indirect economic benefits to the citizens through direct employment, provision of services, revenue generation for the Country government, induce and stimulate local investment and development of physical and social amenities that will benefit the local communities. 

            The project will have a seven times multiplier effect due to industries supported by affordable power and direct business through the supply chain. 

 The power plant will support other initiatives including steel smelting, cement manufacture, service industries, motor vehicle assembly, ICT parks etc.

 

            Upon addition to the grid, the Lamu Power Plant is expected to reduce power generation cost by 12.2%. 

            When reliance on HFO and diesel power generators drops to 0%, cost of power will come down by 36% and hence bring down the cost of doing business.

 

There is also  the Zarara Oil and Gas drilling project in Pate in which the operator, a subsidiary of Midway Resources International, reported that it has spudded Pate-2 natural gas well on its production sharing contracts on Blocks L4 and L13.

The current drilling campaign follows a 4-year evaluation program by Zarara involving 2D seismic over the original Pate-1 discovery area. Royal Dutch Shell PLC and BP PLC drilled Pate-1 in 1970.

That well,  according to Zarara Chief Operating Officer was plugged and abandoned because of down hole gas-control issues and for lack of a regional gas market at the time.

“Pate-2 is where the current drilling is ongoing and it is our expectation that by the end of the year we will have struck commercial gas,” Titford says.

Kenya’s government currently holds 10% carried interest. If commercial gas reserves are struck, the government has rights to another 10% interest with Zarara holding the 90 percent remainder of the rights.

 

It is expected that the gas reserves will provide the country with 200 MW of commercial gas through a 30 to 40 year lifetime period by Zarara Oil and Gas conservative estimates.

This further presents a conundrum for Lamu as a county which according to Lamu residents do not have a stake in gaining once gas reserves are struck in Pate.

Some Lamu politicians and businessmen have expressed concern that such an arrangement would further alienate the Pate Island residents from the economic gains being reaped by outsiders at their expense.

 

“We need to have a situation where mineral wealth extracted from Lamu benefits the Lamu people who are still marginalized,” Lamu governor Fahim Twaha states.

Some politicians have gone as far as stating that a deal similar to the one that the Turkana county government struck with the national government and Tullow Oil company would be beneficial to Lamu residents and Lamu county as a whole.

 

“Presently we are working on a policy paper and then a Bill that would determine how extractive wealth is distributed in Lamu, with sectors such as education and health likely to benefit if such a Bill is passed,” Majority House leader Aboud Babad advises, adding that with all the projects whether in energy or infrastructure something has to give by way of ensuring that Lamu benefits from the socio economic transformation taking place around it.

By Amenya Ochieng 

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