Kenya to sign deal with China’s Fenxi to develop coal blocks

coal mine-stella blu optKenya plans to announce tenders for 31 coal blocks by Q1 2014. (Image source: Stella Blu/Flickr)Kenya's Ministry of Energy has announced plans to sign a concession accord with China’s Fenxi Mining Industry to develop two blocks that have been estimated to contain more than 400mn metric tonnes of coal deposits

According to Bloomberg, the Kenyan Ministry of Energy’s chief geologist John Omenge said Fenxi will pay Kenya a concession fee of US$3mn for Block C and US$500,000 for Block D.

The government of Kenya will get 23.6 per cent of the gross revenue from Block C and 22.1 per cent of the revenue from Block D.

Blocks C and D are situated at Mwingi, 143km northeast of Nairobi. Fenxi won the tenders to explore these blocks in 2011, but the concession accord was delayed when local residents demanded a share of the income generated from the project.

The Ministry of Energy has announced that local residents will be compensated at market value of the land and will be allowed to examine the benefits sharing agreement.

Omenge said following this deal, the government would tender 31 more coal blocks spread across the country in Kwale, Kilifi, Taita Taveta, Tana River, Garissa, Kitui, Tharaka, Meru, Makueni, Isiolo, Samburu, Turkana and Baringo, by end of Q1 2014.

Earlier this year, Kenya had announced plans to add 5,500 MW of electricity to its main grid over the next 40 months. About 2,000 MW of that electricity will be generated through coal.

Kenya's Ministry of Energy has set a target of 30 months to start coal production in the country to fuel its near-term energy requirements.

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