South Korea's Daewoo International is expanding its reach in Africa against serious competition from Chinese firms currently dominating a wide spectrum of infrastructure development in the region.
The company has signed an agreement with East Africa's leading power generator, Kenya Electricity Generating Company (KenGen) for the development of a $1.3-billion thermal power plant on the coast of Kenya.
The 600-MW plant will be implemented under a joint venture with Daewoo holding a 60% interest. KenGen, a partially state-owned firm, will hold the remaining stake.
The project, which will produce an equivalent of 46% of Kenya's total installed capacity, will be the largest such plant in East Africa and is expected to boost economic growth by supplying much-needed energy for a constrained manufacturing sector and ending frequent power cuts.
The plant will have two turbines each with a capacity of 300 MW. The process for picking a supplier and installer of the turbines is under way.
According to Kenya's prime minister, Raila Odinga, who witnessed the signing of the agreement between KenGen and Daewoo in Seoul in late November, the new power station will play a key role in my government's objective to add 1,500 MW of new power capacity by 2019.
Earlier, another state-controlled power company, Kenya Electricity Transmission Company, had awarded Indian firm, Kalpatarau, a $85-million contract for the construction of a 400-KV transmission line to transfer power from three existing thermal power stations at the Coast. The stations are two 90-MW power plants at Rabai and a 120-MW plant at Kipevu. The coal-fired power plant to be developed by Daewoo will use the same transmission line.
The project brings Daewoo's contracts in the continent to $2.4 billion after the $1.1-billion, 39-month turnkey contract it won, under a consortium, for the construction of 1,200-MW cogeneration power plant near the Algerian town of Ain Arnat. Other partners in the Algerian contract, whose exact date for breaking ground is pending, are Hyundai Engineering Co. Ltd. and Hyundai Engineering and Construction Co. Ltd.
These new deals expand Daewoo's growing list of construction projects in Africa, where Daewoo is currently active in South Africa, Nigeria, Cameroon, Democratic Republic of Congo and Egypt. The latest contracts also raises hope of South Korean firms to grow their market share of construction projects in Africa, estimated today at 28%, says the International Contractors Association of Korea.
The coal-fired plant will benefit from the exploitation of coal in eastern Kenya's Mui basin after Chinese firm Fenxi Mining Industry Co. won a 21-year multi-million dollar mining contract to mine coal in Block C and D, with an estimated 400 million metric tonnes of coal.
Energy officials are engaged in investigating availability of additional coal deposits in the Taru formation in Kwale and Kilifi districts, where the Daewoo project is sited. These deposits may prove an added advantage to the coal-fired plant, officials say.