Gov't considers buying 500MW of power from Dangote’s Lamu refinery

The government is considering taking up 500 megawatts of electricity from the proposed Dangote refinery in Lamu, despite its ambition to generate all its electricity from renewable sources by 2030.

The power would be produced using petroleum coke, a by-product of crude oil refining, where plans are underway to generate power alongside petroleum products.

KenGen, however, says the arrangement would be a temporary measure to address a looming electricity supply shortfall, partly attributed to the moratorium on new power purchase agreements.

“We are going to produce about a thousand megawatts in Lamu out of petcoke, and we will have 500MW to sell to the government of Kenya,” said President and CEO of Dangote Group, Aliko Dangote.

The 500 megawatts would be generated using petroleum coke, or petcoke, a carbon-intensive by-product of crude oil refining. Burning it to generate electricity would add to the country’s reliance on fossil fuels.

The proposal comes amid growing pressure on the national grid. Between September 2024 and July this year, peak electricity demand rose from 2,241 megawatts to 2,549 megawatts, an increase of more than 307 megawatts.

“As it stands now, we need all the help we can get to ensure that we continue powering the nation,” said KenGen Acting Managing Director and CEO Eng. Ronoh Kibet.

But the pressure on electricity supply is not entirely a consequence of rising demand.

In 2021, the government imposed a moratorium on new power purchase agreements in a bid to bring down electricity costs. The decision also stalled the development of new generation projects.

The effects of that policy are now being felt as electricity consumption continues to rise.

“When we joined KenGen, the plan was that we would be power-planting; every year we would be commissioning a power plant, but as soon as the moratorium was placed, that meant that every agreement that we had signed could not crystallise into financing. So we took a break from power-planting, but that did not stop the peak demand; that did not stop retirement of certain plants from happening. And once it was lifted, now we are playing catch up,” said Kibet.

Kenya already imports electricity from Ethiopia and Uganda to supplement local production, while geothermal, hydropower, wind and solar account for the bulk of its electricity generation, bringing additional renewable capacity online takes time.

That has left the country weighing its immediate electricity needs against its longer-term climate commitments. KenGen describes the proposed fossil fuel supply as a stopgap rather than a change in policy.

“And this is just transitional; remember our goal is to be at a hundred per cent green but to get there we also have to accommodate all these rapid developments that are happening,” Eng. Kibet added.