Amu Power is in talks with its partners in the stalled 1,050-megawatt coal-fired power plant in Lamu with a view to advance the project.
The venture has faced a series of setbacks including revocation of an environmental licence, delays in raising funds from banks and an announcement by the technical partner General Electric that it is exiting the coal power business.
“Discussions are progressing with key stakeholders to agree on the way forward on the project,” Centum Investment Company , which owns a 51 per cent stake in Amu Power, said in a trading update.
Amu Power was created as a joint venture between Gulf Power (as a developer and co-sponsor) and Centum (co-sponsor).
The investment firm says it has already made a provision of Sh2.1 billion, representing the entire amount it has invested in the project, to take into account the emerging challenges.
Progress of the project or its sale to other parties will now represent a gain or recovery for Centum given that it has already written off the investment.
“Amu is still working on the project and any progress or recovery will be a gain to Centum,” James Mworia, Centum’s chief executive, said.
Amu Power had made substantial progress, including securing a power purchase agreement with Kenya Power, loan agreements and a Government of Kenya Letter of Support.
It has, however, not yet secured a partial risk guarantee which is required to access funds from lenders. The project’s environmental approvals have also been revoked by the National Environment Tribunal.
Standard Bank, which is among the lenders that had agreed to finance the Lamu power plant, recently issued a new lending policy that severely restricts its participation in coal energy ventures.
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