The Industrial and Commercial Bank of China (ICBC) has opted to halt its proposed financing of a 1,050 MW coal power plant in Kenya’s Lamu County.
The development was reported by a local NGO, Save Lamu. ICBC has not confirmed the move.
ICBC signed a financial service agreement with a syndicate of China’s Power Construction Corp. and Electric Power Design Consulting in June 2015. The financier agreed to provide around $900 million of export credit financing as lead bank, while also serving as the financial advisor.
Save Lamu reported that ICBC had opted not to go ahead with the project because of environmental and social risks. The NGO cited a reliable source at ICBC as reporting the bank would not go ahead with its financing plans.
Amu Power was to build the plant at Kwasasi, in Lamu County. It would have been the largest coal plant in East Africa and first in Kenya. Amu Power is a joint venture of Centum Investments and Gulf Energy.
Save Lamu said ICBC was to finance up to $1.2bn of the power plant’s $2bn cost.
“We are very happy and grateful to hear that the ICBC will no longer fund Amu Power for the coal project,” said Save Lamu’s vice chairperson Is’haq Abubakar. The representative went on to say the group would “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”.
The NGO, and others, have been fighting the Lamu power plan for some years. Activists said the plant would cause irreparable environmental, social and cultural damage to Lamu.
The National Environmental Tribunal (NET) cancelled the environmental licence for the project in June 2019, following petitions protesting the plans. Amu is appealing the decision.
ICBC is not the first to have left the project. African Development Bank (AfDB) said it would not support the plan in November 2019. The AfDB had been intending to provide a partial risk guarantee. Similarly, GE was linked to the project but is shifting away from coal.
“While we are happy to hear this great news, we will continue our lobbying so that no new investor will be sought to fill the gap left by ICBC. We want the project not just suspended, but cancelled entirely,” Save Lamu’s Khadija Shekuwe said.
Save Lamu is part of a broader movement opposing coal in Kenya. It is supporting communities in the Mui Basin in their opposition to coal mining in Kitui County.
ICBC, in 2015, named Kenya as a participant of the Chinese state-backed One Belt, One Road programme. Building the Lamu power plant would solve power shortages for millions in the region, ICBC said, while also powering a rail line from Mombasa to Nairobi.
Kenya has made dramatic progress in expanding electrification to its population. According to the World Bank, in 2015, when the agreement was signed, 41.6% of Kenyans had access to power. By 2018, the most recent year for data, this had risen to 75%.
Chinese investment is still available to some coal projects in Africa. ICBC is working on the Sengwa project, in Zimabwe, for instance.
350.org attributed ICBC’s decision to drop the Lamu project to pressure from the Save Lamu campaign. The Chinese bank was involved in various other coal projects, 350.org’s finance campaign manager Yossi Caden noted.
“ICBC faces fierce opposition from local groups on the same ground as Lamu of environmental and social risks. It’s time for ICBC to assess correctly those risks and stop its financing to these and all other coal projects,” Cadan said.
Japan’s Marubeni pulled out of a proposed coal power plant in South Africa. Reuters reported a company official as saying it would no longer go ahead with “any new coal project”, specifically including Thabametsi, in South Africa’s Limpopo Province.
Three South African banks – Nedbank, Standard Bank and FirstRand – pulled out of Thabametsi in 2019. South Korea’s Kepco dropped its involvement in September, although saying the plant might have a future as a gas-fired site.