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Daily Nation Editorial: Relook at Lamu coal project to avert loss

Editorial in Kenya’s largest newspaper

Wednesday June 12 2019

Kenya’s growth depends on efficient infrastructure. 

This is the reason the government has invested heavily in infrastructure development, especially in the past two decades. 

However, experience has shown that infrastructure projects have become conduits for looting taxpayers’ funds. 

They have become a veritable source of public debt which, unfortunately, cannot be justified because most of them are unprofitable and unsustainable.

This provides the background for discussion on the proposed Lamu Coal Power Station, a project estimated to cost a whopping Sh900 billion. 

If implemented as conceived, it would stand out as one of the most expensive projects ever in Kenya — dwarfing even the standard gauge railway, whose phase one was completed two years ago at Sh327 billion but which cannot repay its costs.

As we reported on Tuesday, independent experts, US-based Institute for Energy Economics, have raised the alarm over the viability of the project, and for very good reasons. 

First, the cost is just astronomical and the terms of the contract prohibitive. 

The overall estimated capacity of the project is 981 megawatts, for which the taxpayers are expected to pay Sh900 billion for 25 years, with a clause providing that the government has to pay whether or not the plant is operational and supplying power.

In effect, the government’s hands are practically tied at the back.

Second is the value of the project. The world is moving away from coal power to clean energy due to the inherent environmental risks of the former.

Consequently, the drive is towards power from solar, wind and geothermal sources. 

It is not lost on anyone that the government has been investing in clean and renewable energy as it seeks not to just conform to emerging global trends but secure its future as population grows and consumption rises.

Thirdly, mega projects provide perfect opportunities for deceit and grand corruption. 

On paper, such projects are contracted to foreign companies but beneath the facade are locals, mostly well-connected political-cum-business wheeler dealers, who exploit the opportunity to skim public money from the projects.

Moreover, on paper, most of these projects look compelling. However, experience has shown that most of the projections end up being void. 

Often, such projects do not have capacity to generate the outputs laid out in the plan but end up as ghost ventures.

We encourage investment in infrastructure because of its positive spin-off effects. However, we call for caution. 

Most of these high-sounding projects are hollow but commit the government to unjustifiable expenditures. 

With the experience of SGR and other such grandiose projects that have proved untenable, the country cannot afford to burn its fingers in a gamble such as the proposed Lamu coal power project.

This project must be subjected to thorough investigations.