Monday, 30 July 2012

Go Tanzania Go

 A couple of articles ago, I wrote in our sister publication that east Africa is headed  towards becoming amanufacturing hub in Africa. Go to

One of my critics- probably a Tanzania wondered whether i don't  have anything better to say. My analysis was based on the fact that East Africa is becoming energy secure-meaning the region has more energy sources to choose from.

Now events in Tanzania prove that  I was not talking hot air. Reports indicate that Tanzania is beginning to take right choices and make right decisions. The country will soon begin construction of a 390MW gas fired electricity generating plant worth a US$598 million.  That in my view is the best decision  taken by Tanzania. 390MW of power is a significant  proportion of Tanzania current generating capacity. Some estimates place it at aroiund 30-40 per cent of the current output.

Tanzania has significant quantity of Natural gas, and more is being found every week.  This means that she has the potential to produce more gas fired electricity for herself and spare some for her energy starved neighbours. This being a reliable, cheap and clean source of energy, power rationing in Tanzania will soon be history.

Cheap power means low cost of production and therefore cheap goods and services. That is what is expected of  industry in Tanzania - efficient operations that produce cheap, quality products for the  domestic market and even  for the regional market.

What's more,  more power available means that TANESCO will have to connect more people, including the rural areas which would result in more employment in  the country.

Another step in the right direction is the decision to process gas in order to add value. Reports indicate that the construction started last week on a 532-km (330 mile) pipeline funded by a $1.2 billion Chinese loan.
So what should we say? Go Tanzania Go.

Thursday, 26 July 2012

Another brick laid vision 2030 looks real

OlKaria I&ii generate 150mw. Ol KariaIV to add 280Mw 

O.K CALL ME AN OPTIMIST and I shall plead guilty as charged. In my vocabulary, half –empty glasses don’t exist-only half full.  At least half-full glasses can be filled.

But I shall announce to all and sundry that another brick has been laid for Kenya’s vision 2030.

Kenya’s President Mwai Kibaki, early this week commissioned what will be the largest geothermal power plant in Africa. It is the US$1.3 billion OlKaria IV which will produce a whopping 280MW of geothermal power by 2014.

Olkaria IV is co-financed by Ken Gen, World Bank, German Development Corporation, Japan International Cooperation Agency (JICA), the French Development Agency (FDA), and the European Investment Bank (EIB).

This follows hot on the heels of award of a €31million (ksh3.2 billion) contract for the construction and upgrading of more than 300KM of roads by the Lake Turkana wind power project. The contract was awarded to Mombasa based engineering and construction firm, Civicon Kenya.

The €582 million project in Northern Kenya will produce some 300MW of wind generated electricity, also another first in Africa. In short Kenya has formed a bad habit of firsts, firsts to send fellows to ICC, First in Olympics games pocketing a number of gold medals. I wonder why no one has thought of awarding us a gold medal in use of green energy.

Olkaria, once completed in 2014, will add e 25 per cent to Kenya‘s grid. And Lake Turkana wind which also comes on stream in 2014, will also add another 25- 30 percent to the grid. In short, come 2014 and renewable energy will contribute 750 MW of electricity to the national grid.

In political parlance renewable energy will form the majority, of power sources in Kenya. And with GDC also plotting to add another 1600MW of Geothermal power over the same year, we can say, renewable energy will form the runaway majority in power generation.-Where is that gold medal?

Wednesday, 18 July 2012

Thai Firm to enter east Africa's exploration industry

Thailand’s PTT E&P is poised to enter the east African LNG exploration industry if she pays some US$1.9 billion to takeover of Cove Energy Plc. after Royal Dutch/Shell bowed out of a five-month bidding war. PTTE&P had outbid Shell/BP by more than $300 million.

This acquisition will give PTT Exploration and Production exposure to the giant offshore discoveries made in East Africa in the past year. The region is emerging as a future LNG and crude oil giant and is well-situated to export into Asia.

Cove owns an 8.5 percent stake in a Mozambique license in the Rovuma offshore basin containing gas discoveries that could be a major provider of liquefied natural gas (LNG) to energy-starved Asia. She also has a 10 per cent stake in Ruvuma offshore. In Kenya, Cove Energy Plc. has a 10 per cent in offshore area 1.5; 10 per cent in 17; 25 per cent in 1.10A; 15 per cent in1.10B and a 10 per cent in 1.11A.

Shell quit the bid because they did not to pay for an overpriced bid, the company said.  PTT E&P price is said to be a premium. Shell could have found another suitor given that the fuels exploration field is awash with potential suitors.

 WE could be witnessing a repeat of the ATC privatisation saga in 2002. Both Kenya Airways and South Africa Airways were determined to control the Tanzanian Airspace for different reasons.  SAA was looking for a hub inland  while KQ was determined to keep competition at bay. So both outbid each other for a single plane airline, pushing the price tag to US$20 million.

South Africa Airways was determined to buy ATC and did everything, including political lobbying, to ensure that the deal did not go to KQ.   Sensing danger, KQ employed abit of guerilla tactics-. KQ sought and found a different suitor in the form of Precision Air, then pulled out of the ATC deal at the last minute. SAA became the only suitor but the marriage never lasted.

Shell, like KQ, has much at stake in the LNG market, hence its strong desire to get involved in potential new supplies.  Being one of the most experienced international majors, Shell is likely to find another suitor. Analysts point at a possible marriage between Shell and U.S. explorer Anadarko which has a 36.5 percent stake in the Mozambique license, but little experience of LNG.

Other points of entry to east Africa for Shell could include tie-ups with Italy's ENI, which has also found gas in Mozambique, or BG Group and Exxon Mobil, which have discoveries off the coast of Tanzania.

Analysts said PTT E&P would need to invest $1 billion-$1.5 billion into the project annually over the next few years.

Tuesday, 10 July 2012

The first brick to Africa's largest Wind power Plant layed

THE LAKE TURKANA  wind power project has awarded the first 31million (ksh3.2 billion) contract for the construction and upgrading of more than 300KM of roads. The contract was awarded to Mombasa based engineering and construction firm, Civicon Kenya.

The civil works contract forms 5.3 per cent of the entire project cost of €582 million. The road construction project will involve upgrading of the 204km road from Laisamis to the wind farm site. It will include upgrading of another 109 KM within the162Km2 site for construction, operations and maintenance. 

The award of the contract is a signal that the World Bank divisions-IDA and MIGAS-may have guaranteed the €582 million debt or are very close to doing so.

The LWTP story is a story of dogged determination on the part of its promoters. It has been in the works for the last Nine years- a time long enough for the weak at heart to give up. It all started way back in 2006 when Willem Dollerman, who knew the site saw an opportunity for wind power generation as the cost of crude oil shot past US$50 per barrel.

There followed a string of activities including registration of Special Purpose Vehicles (SPVs) in Europe and Kenya to promote the project.  There followed a creative way of fundraising by way of selling shares in the Europe registered SPVs –KTF-Energy and KP&P Africa,  by private placement to finance initial stages.
 A feasibility study established the reliability of the wind flow at 11metres per second. Then a 20-year PPA signed with KPLC. This paved the way for institutional financiers to have serious look at the project.

The awarding of civil works contract lays the first brick close to the production of the 300MW wind electricity. The construction of the roads will last 15 months paving the way for the transportation of the wind turbines and transformers to the site. The first 90 MW of power is expected on stream early 2014.

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