Page 4 - AsiaElec Week 46

AsiaElec COMMENTARY AsiaElec
Africa begins exit from coal
The AfDB will not fund Kenya’s Lamu coal project, but Beijing is unlikely to walk away from coal as a key tool of its investment strategy in Africa, writes Richard Lockhart
KENYA
WHAT:
The AfDB has confirmed it will not help fund the $2bn Lamu coal-to-power project
WHY:
The bank is pursuing a 100% green energy strategy
WHAT NEXT:
China is unlikely to give the Lamu project, and more legal action is likely
THE African Development Bank (AfDB) has confirmed it will not fund the $2bn Lamu coal- to-power project in Kenya as originally planned, and now intends to withdraw from new coal pro- jects across the continent.
AfDB president Akinwumi Adesina told the bank’s African Investment Forum in Johan- nesburg that it would now focus on renewable energy.
He said that the AfDB took environmental concerns seriously, and that coal projects risked becoming “stranded assets” on the AfDB’s bal- ance sheet, Reuters reported.
AfDB acting vice-president for energy Wale Shonibare said the bank “did not move forward with the Lamu Coal transaction and had no plans to do so in the future.”
The bank executive’s comments this week follow Adesina’s statement at the September UN Climate Action talks in New York that the multi-lateral development institution (MDI) was “getting out of coal,” although at the time he did not mention any timetable, or confirm how Lamu would be affected.
Project history
The 1,050-MW Lamu coal-to-power project was supposed to begin construction in 2015, backed by Kenyan and Chinese investors. The AfDB did not commit to backing the controversial project, and indeed in May published an environmen- tal and social impact assessment for the project, which would be built close to a UNESCO World
Heritage Site.
However, development has been halted by a
legal action, and a ruling against the project by the Kenyan Environmental Tribunal in June 2019 means that little progress on construction or financing has been made.
The project has proved controversial, as it will run on imported Chinese coal, produce CO2 emissions and cause widespread local pollution.
The project developer, Chinese-backed Amu Power, now has to conduct a second environ- mental impact assessment (EIA) and carry out more extensive consultations with the public in order to move ahead with the project.
Yettheprojectstillhasfinancialbackingfrom China. Amu Power is a consortium of Kenya’s Gulf Energy and Centum Investment along with Omani, US and Chinese interests.
It has signed a $2bn, 25-year build, own and operate (BOO) contract with China Power Global to build the plant.
The Industrial Commercial Bank of China is to provide $1.2bn, while General Electric has taken a 20% stake for $400m, and will provide its Ultra Super-Critical clean coal technology.
Chinese strategy
The bank’s exit may throw a spanner in the works for the Lamu project, but the Chinese are key to push ahead as it acts as a key pivot in Beijing’s Belt and Road Initiative (BRI).
The power plant is part of the Chinese-backed $25.5bn Lamu Port South Sudan Ethiopia
The Lamu UNESCO World Heritage Site
P4
w w w . N E W S B A S E . c o m Week 46 20•November•2019