China's Fenxi Mining Group has been chosen by Kenya to develop coalmines that cover at least two blocks from the Mui basin in the country's eastern province.
John Omenge, chief geologist at Kenya's ministry of energy, told Reuters that blocks C and D were given to Fenxi Mining Group, after a thorough review made on its bids.
"Two bids that were submitted by Fenxi Mining Group for block C and block D were the most financially and technically compliant," Mr Omenge said.
Fenxi Mining Group will pay Kenya $3 million for block C and $500,000 for block D, in return for a renewable concession of 21 years, subject to parliament approval, Mr Omenge added.
Kenya will get to control an 11 per cent participation in the project as well as share in its projected gross revenues at 23.6 per cent for block C and 21.1 per cent for block D.
Coal from the Mui basin, where block C contains an estimated minimum of 400 million tonnes, will be used to fuel domestic consumption.
Part of the coal output will supply the cement and steel industries, which import coal worth 3.6 billion shillings annually. The rest will be earmarked for energy generation to help fill a gap usually filled by diesel-fired, thermal plants.
A 600-megawatt coal plant is being planned to be constructed at the coast, which will initially consume imported coal and afterwards local coal once production from the Mui project starts.
Production is expected to commence in the next three years.
In 2010, Kenya received interests from 16 firms when it started the search for a company to mine the coal. It was narrowed down to 11 firms, and later seven eventually submitted bids.