KenGen hires US consultancy for Olkaria VI project
Menengai geothermal field in Nakuru. KenGen plans its first power plant funded through a public-private partnership. PHOTO | FILE
What you need to know:
K&M Advisors is the transaction advisor while New York Stock Exchange-listed engineering firm AECOM is the technical advisor for the multi-billion shilling project dubbed Olkaria VI.
K&M is currently advising Tanzania Electric Supply Company Ltd on a similar transaction to develop a 250MW gas turbine power plant.
The Kenya Electricity Generating Company (KenGen) is set for its first public-private partnership project in a planned 140-megawatt geothermal power plant after hiring American consultancy firms to advise it on the same.
Maryland-based K&M Advisors is the transaction advisor while New York Stock Exchange-listed engineering firm AECOM is the technical advisor for the multi-billion shilling project dubbed Olkaria VI.
This will be KenGen’s inaugural power plant funded through a PPP framework – where a strategic investor will inject cash in return for equity— as a strategy to close the financing gap given the huge capital outlay required for steam power projects.
“K&M will also recommend the best Public-Private Partnership (PPP) model and advise KenGen on risk allocation and the contractual structure, as well as prepare all necessary project agreements,” said Alfonso Guzman, president of K&M Advisors.
Mr Guzman said the assignment is expected to last about 18 months, where K&M Advisors will prepare the request for qualifications and request for proposals, advise KenGen through the procurement process and proposal evaluation, as well as provide transaction advisory support through to financial close.
K&M is currently advising Tanzania Electric Supply Company Ltd on a similar transaction to develop a 250MW gas turbine power plant.
In total, K&M has advised on 18 power PPP transactions that reached financial close, two of which are in Sub-Saharan Africa, the American firm said.
Kampala-based consultancy CMIRS is also part of the consortium as advisor on crafting the public–private partnership charter.
KenGen managing director Albert Mugo declined to reveal finer details on the Olkaria VI project such as the cost, equity structure, financing design, and timetable of drilling geothermal wells.
The State-owned power producer had installed capacity of 1,618 MW as at December 2015 and makes up 70 per cent of Kenya’s total capacity.
Olkaria VI is part of KenGen’s plan to tilt the energy mix in favour of green sources such as geothermal, which currently accounts for a third of the total while hydropower makes up half of the firm’s capacity.
KenGen has set aside a Sh47.8 billion financial war chest for the Olkaria VI project which is expected to come on stream in the year 2019, according to the firm’s latest annual report.
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