Kenya and Africa’s richest man, Aliko Dangote, are exploring a major 1,000-megawatt LNG power project linked to the proposed Dangote refinery in Lamu, a move that could reshape the region’s energy market and create a fresh route for Tanzanian natural gas into Kenya. The proposed plant would be twice the refinery’s initially planned 500MW captive power capacity.
The expanded power project is being considered as Kenya struggles with a tightening electricity supply and rising demand. President William Ruto’s economic advisory team, led by David Ndii, has proposed that Kenya Power purchase excess electricity generated by the plant through a potential power purchase agreement. The additional power would mainly serve the Lamu Special Economic Zone and the planned petrochemical complex, while surplus generation could be fed into Kenya’s national grid.
Kenya’s Energy Principal Secretary Alex Wachira said the government is prepared to support the development of a captive power plant for the refinery, while Kenya Power Chief Executive Joseph Siror identified Tanzania as one potential source of LNG. Tanzania holds an estimated 47 trillion cubic feet of offshore gas resources, giving it a potentially important role in meeting Kenya’s growing demand for reliable power. Siror said LNG could initially be supplied through a floating facility before discussions move towards a longer-term gas pipeline.
The development could also revive the commercial case for the long-delayed Kenya-Tanzania gas pipeline, which the two countries agreed to develop in 2021. The pipeline, planned to connect Mtwara in Tanzania with Mombasa in Kenya, has made limited progress, but new demand from Dangote’s proposed refinery power plant and Kenya’s planned 1,200MW LNG project at Dongo Kundu could provide a stronger incentive to move the project forward.
Dangote is planning to replicate the scale of his 700,000-barrels-per-day refinery in Nigeria at Lamu, with the Kenyan project estimated at $16 billion-$17 billion and expected to serve fuel markets across Eastern, Central and North Africa. Kenya’s government is offering incentives, including Special Economic Zone tax and customs benefits, while considering a $500 million investment for a 10% stake. However, LNG costs and exposure to global gas prices remain key risks, meaning Kenya will need competitive supply deals if the project is to deliver cheaper and more reliable electricity to consumers.
source: theafricareport
