Kenya’s KSh39bn Floating LNG Power Plant Faces a Long Road to DeliveryKenya’s KSh39bn FloatingLNG Power Plant Faces aLong Road to Delivery

The proposed plant could generate up to 1,200 megawatts (MW), with private investors expected to finance, own and operate the facility for an extended concession period. Its eventual effect on electricity bills will depend on project delivery, the cost of imported gas and how the plant is dispatched within Kenya’s power system.

A report by Business Daily, published on 28 October, put the estimated investment at KSh39bn, citing National Treasury estimates. The proposed facility would sit on a floating barge off Dongo Kundu, near Mombasa’s industrial and port infrastructure.

The project is not yet a completed investment

The National Treasury’s PPP project progress report, dated 10 April 2026, described the LNG-fired plant as a project whose concept note had been approved in March to proceed to a feasibility study. It also recorded procurement steps for a transaction adviser.

That status matters. A project estimate and a proposed generation capacity do not mean that financing has closed, construction has started or electricity will arrive on a fixed date. Feasibility work, procurement, commercial negotiations, permits and infrastructure decisions can all affect the timeline and final price.

The latest reporting describes staged capacity additions: an initial 300MW, a further 300MW by 2028 and the remaining 600MW by 2032. Those are proposed milestones, not proof that each phase is funded or guaranteed to enter service on schedule.

Why Kenya wants another source of power

Thermal plants are often used when electricity demand peaks, including in the evening, and when hydropower output is constrained by dry conditions. But generating electricity from imported fossil fuels can be expensive, leaving consumers exposed to fuel-related charges in their bills.

Business Daily reported that thermal generation costs cited in the project review were substantially higher than locally produced hydropower. The difference helps explain the government’s interest in a dispatchable source that could reduce the need to run more expensive thermal units at peak times.

However, an LNG plant would not automatically make electricity cheaper. The overall cost would depend on the price of gas, shipping and handling, exchange-rate movements, the plant’s financing terms, and the tariff or power-purchase arrangement agreed with the buyer.

Imported gas is a central dependency

Kenya has no confirmed domestic LNG reserves identified for this project and would need to rely on imported fuel. Kenya and Tanzania signed an agreement in 2021 concerning a pipeline to transport gas from Mtwara towards Mombasa, but the availability, timing and economics of the supply route remain central questions for the project.

A floating power plant can reduce the need for some onshore generation infrastructure, but it still requires dependable fuel deliveries, port and marine facilities, grid connections and clear arrangements for paying for the electricity it produces.

For manufacturers, households and other power users, the key issue is not simply whether Kenya adds 1,200MW to its plans. It is whether the project can deliver reliable electricity at a competitive cost after fuel, financing and infrastructure expenses are included.

The milestones that will determine delivery

The next meaningful milestones are the outcome of feasibility work, the procurement and appointment of project advisers, the eventual commercial structure and evidence of a bankable gas-supply plan. Until those details are settled, the KSh39bn figure and staged capacity schedule should be treated as estimates and proposals rather than a final construction commitment.

The project is part of a wider debate over how Kenya can balance reliable supply, lower power costs and the risks of depending on imported fuel. As explored in Mwenendo’s coverage of Kenya’s economic growth, energy costs matter because they flow through to businesses, production and household budgets.