[Cancelled] ICBC provides $900 million export credit for 981.5 MW Lamu Coal-Fired Power Plant Project

[Cancelled] ICBC provides $900 million export credit for 981.5 MW Lamu Coal-Fired Power Plant Project On June 8, 2015, the Industrial and Commercial Bank of China (ICBC) signed an indicative term sheet for a $900 million export credit financing agreement with Amu Power Company Limited for the 981.5 MW Lamu Coal-Fired Power Plant Project.

The export credit financing agreement was reportedly finalized in 2015, but the official commitment date is unknown. The borrower was responsible for purchasing buyer’s credit insurance rom Sinosure.

The borrower also pledged a number of different sources of collateral, including all project revenues and assets and its insurance policy with Sinosure.

Kenya’s Ministry of Energy and Petroleum (MoEP) requested Expressions of Interest for the 981.5 MW Lamu Coal-Fired Power Plant Project in 2013, invited tenders in early 2014, and awarded the project to Amu Power Company Limited in September 2014.

Amu Power Company Limited is a special purpose vehicle (project company) that was created by its sponsors/shareholders for the purpose of financing, designing, constructing, owning, maintaining, and operating a 981.5 MW coal-fired power plant in Lamu County, Kenya, which will sell power to Kenya Power and Light Company (KPLC) under a 25-year Power Purchase Agreement (PPA).

Amu Power Company Limited is 51% owned by Kenyan investment firm Centum Investments and 51% owned by Oman’s Gulf Energy.

Sichuan Electric and Consulting Company Limited and Power Construction Corporation of China were the EPC contractors responsible for project implementation.

This independent power project (IPP) was developed under a Build, Operate, and Transfer (BOT) structure and financed according to a 75:25 debt-to-equity ratio.

The project’s construction start date was originally scheduled for September 2015 and the power plant was expected to be finished within 30 months by about 3,000 workers, including 1,400 Chinese workers. The plant’s commercial operations date (COD) was expected to occur no later than December 31, 2019.

However, implementation was delayed due to environmentalists’ opposition to Kenya’s Energy Regulatory Commission (ERC) issuing an energy generation license for the project.

The project received environmental approval from Kenya’s National Environment Management Authority (NEMA) in September 2016, while Kenya’s Energy Regulatory Commission granted a development license for the project in February 2017.

Then, on August 4, 2017, Amu Power Company Limited finalized a power purchase agreement (PPA) with Kenya Power and Light Company (KPLC). Soon thereafter, Kenya's National Treasury issued a formal letter of support for the project. However, the project continued to suffer delays due to environmental protests and legal hurdles.

The project was opposed by a number of environmental organizations, including Save Lamu and the Kwasasi Mvunjeni Farmers Self-Help Group (also known as the Kwasasi Farmers Self-Help Group). Save Lamu is a community-based umbrella organization made up of over 40 other organizations from Lamu, Kenya.

The Kwasasi Mvunjeni Farmers Self-Help Group is a collective of farmers who have been displaced without compensation by infrastructure associated with the proposed 1,050-megawatt coal-fired power plant in Lamu.

Save Lamu and the Kwasasi Mvunjeni Farmers Self-Help Group jointly opposed the project due to concerns about serious risks posed by the coal plant to their communities’ health, livelihoods, food security, environment and valuable cultural heritage.

They claimed that “our farmers are being displaced from their land, losing their income and food security, without a clear plan for their compensation.

Tourism and artisanal fishing, the two most important industries in Lamu, face existential threats from the plant’s potentially dramatic disruption of the distinct character of the area and the productivity of its marine environment.

Indigenous communities are being further marginalised, losing access to critical natural and cultural resources that they have sustainably managed for generations.

Our concerns about those risks have been exacerbated by the lack of meaningful community consultation and participation in project design.” On July 26, 2019, Kenya’s National Environmental Tribunal (NET) ruled that the environmental and social impact assessment (ESIA) license for the Lamu coal-fired power plant in Kenya was insufficient (due to a lack of public participation) and that the construction had to be halted.

Amu Power Company Limited appealed the decision. Then, on November 24, 2019, the African Development Bank (AfDB) announced that it would pull out of the project.

According to project documents published by the project proponents, AfDB was expected to provide a partial risk guarantee for the project.

Then, on November 16, 2020, Save Lamu announced that ICBC had withdrawn from Lamu coal plant. “We are very happy and grateful to hear that the ICBC will no longer fund Amu Power for the coal project.

We as Save Lamu will always be there to defend its people and our environment; we don’t want a coal project in Lamu County and in Kenya at large,” said Is’haq Abubakar, Vice Chairperson at Save Lamu.

Save Lamu had been using various approaches to lobby against the Lamu coal plant in the hope that investors such as ICBC would pull out including petitions, demonstrations, and other lobbying tactics. If completed, the Lamu 981.5 MW power plant would have been the largest single power station in Kenya.

The power generated would have been transmitted to Nairobi, the country's capital, via a new 520 kilometers (320 mi), 400 kiloVolt electricity transmission line.

In the initial years, the station would utilize imported coal, mainly from South Africa, and later convert to locally sourced coal from the Mui Basin in Kitui County.