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Is local coal the cure for petrol woes?
By KITAVI MUTUA
Nairobi, Kenya, 25 May 2008 - The cost of manufacturing in Kenya could go down considerably once the country begins to exploit extensive coal reserves in Ukambani.
The coal deposits found in the swampy Mui basin in Kitui and Mwingi districts, is touted as the best alternative source of energy to cushion the economy against the adverse effects of high oil prices.
Energy experts say the discovery is also timely as the country needs a lot of energy to push the Vision 2030 development agenda.
Coal is the cheapest source of energy in the world, and its widespread use played a significant role in the Industrial Revolution in Europe in the mid-19th century.
Coal, which is currently imported from South Africa, is used in a variety of ways but mainly in the generation of electricity.
The discovery of the deposites of bituminous or soft coal at a shallow depth of 11 metres comes against a backdrop of escalating global oil prices that are having negative effects on the country’s manufacturing, and transportation sectors.
Manufacturers are optimistic that once coal is used to generate energy, production costs could decline signficantly, resulting in a drop in prices of manufactured goods.
For example, players in the lucrative cement industry are confident that once Kenya starts using her own coal, cement prices could go down by more than a third.
Mr Pradeep Paunrana, managing director of Athi River Mining Company, says the high cost of coal imports contributes to more than half the total cecost of cement production through the manufacture of clinker.
“The cost of importing coal obviously determines the production costs and the trend in consumer prices,” Mr Paunrana told Sunday Nation.
A ton of coal today goes for US$60 (Sh4,140), according to international market prices.
With additional freight and clearance charges, the total cost doubles by the time it reaches manufacturers in Kenya.
The MD of the cement firm confirmed to Sunday Nation that the price of coal accounts for up to 33 per cent of total cement production costs.
For instance, in Nairobi a 50 kg bag of Bamburi cement is retailing at an all-time high of Sh715 while Athi River’s Rhino cement sells for Sh650.
If the government fast tracks coal mining plans, experts believe that retail prices for cement could be brought down to as low as Sh450.
The cost of electricity is also likely to come down as a consequence, it is predicted.
On its part, the government has decided to shift gears in terms of investing in electricity generation in the next 20 years, according to projections by the Ministry of Energy.
The plan shows that Sh133 billion will be pumped into coal projects to generate an additional 1,000 megawatts or about 20 per cent of the nation’s electricity needs.
By then, Kenya will have an electricity generation capacity of 4,871 megawatts against a requirement of 4,620 megawatts.
At present, 67 per cent of total power is generated from hydro sources, 10 per cent from geothermal and 23 per cent from thermal which are sensitive to fluctuating international fuel prices.
Mr Alfred Odawa, the acting chief geologist at the Ministry of Energy, says the anticipated exploitation of coal would free some of the country’s foreign exchange reserves for other purposes.
“With increasing world energy demand and rising oil prices, the exploitation of coal means that Kenya’s industrial development will be achieved at a faster rate,” he said.
With an indigenous source of energy, the country could be able to attain full industrial development by 2020, Mr Odawa said.
Exploratory drilling spearheaded by government geologists which began in 2001 has been yielding encouraging results raising hopes of Kenya becoming a coal producer.
Of the 30 test drills made to varying depths, geologists have so far encountered coal in 17 and inflammable gas in two others.
Exploration has been hampered by the lack of specialised drilling equipment, according to the Ministry of Energy.
Samples of the mineral deposits extracted during the exploration have been chemically analysed and found to meet the required standard – an average calorific value of 18MJ/Kg.
The samples were analysed by the University of Nairobi’s Geology Department and in South Africa where for many years coal mining has been a major activity.
The government is finalising tender documents to invite fresh international bids from reputable firms to conduct estimations of coal reserves in the area and determine the economic viability of coal mining there.
Coal is formed in swamps and bogs where water is deficient in oxygen and where organic matter accumulates faster than it decomposes.
The swampy Mui basin stretches 55 kilometres across the two districts.
It is an elongated trough measuring about six kilometres wide with an estimated area of 400 square kilometres.
The basin has been sub-divided into Sombe, Kavati, Itiko, Mutito, Yoonye, Kateiko, Isekele and Kalunga sub-basins but activities are concentrated only in Kateiko and Yoonye.
It is an extension of the African Karoo formation which runs from South Africa to Somalia through Mozambique, Tanzania and Kenya.
Source: Daily Nation