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Wednesday, 19 February 2014

Bamburi Cement sign a Power Generation deal to produce electricity in Mombasa County, Kenya

Bamburi Cement Tuesday, 18th February, signed a US$55mln  deal with Mombasa county to build a power generation plant from the city’s garbage.
The Nairobi bourse-listed firm plans to collect Mombasa’s solid waste and use it to generate power for its cement factory to cut reliance on diesel-fired generators and electricity in production.
Bamburi wants to curb costs through cheaper energy in the race to defend its market following a vicious price war that has intensified with the entry of new players such as National Cement, Savannah Cement and Mombasa Cement.
Conversion of municipal solid waste to energy offers the twin advantages of generating cheap power for Bamburi and conserving the environment in Mombasa.
“We are keen on utilising alternative fuels derived from solid waste to reduce use of fossil fuels, preserve natural resources and reduce carbon dioxide emissions to improve climate change,” said Hussein Mansi, managing director at Bamburi Cement.
The deal will see Bamburi, its anchor shareholder Lafarge and the French government invest US$31million in funding a feasibility study and providing expertise and equipment to help boost the county’s waste management capacity.
The study will help establish the viability of the power project and the capacity that can be generated from Mombasa’s solid waste.
Bamburi has also offered land valued at US$22million that will handle the solid waste management as well as the power plant whose capacity and construction timelines were not disclosed.
The power plant may also emerge as a revenue stream for Bamburi if it generates excess electricity to inject to the national grid.
The energy regulator has fixed the feed-in-tariff for biomass and biogas at $0.10 per kilowatt hour.
Bamburi Cement energy cost was US$92million in the year to December 2012, equivalent to nearly a third or 29.3 per cent of the cement maker’s total costs of US$314million.
This has forced the firm to turn to environmentally friendly biomass as a substitute for fossil fuel, which is expensive.
Costs are emerging as profit and market share drivers in a market where cement prices are trading at a 12-year low on a market share war triggered by new entrants.

Bamburi joins other firms such as Mumias and Imenti Tea Factory which generate their own power and sell excess capacity to the national grid.

Bamburi in 2012 began using biomass fuels like coffee husks, rice husks and palm kernel waste at its Hima factory in Uganda to cut energy costs.
A study funded by Danish agency Danida shows that Mombasa, with a population of about 950,000, produces 750 tonnes of waste daily — with less than half of it collected and mostly dumped at Kibarani and Mwakirunge.
Nairobi County in September, 2013 last year signed a US$318million. deal with German firm Sustainable Energy Management AG to set up a 70 megawatt power plant at the city’s Dandora dumpsite.
By Wachira Mwangi