Energy and Petroleum Principal Secretary Joseph Njoroge (left) and KenGen managing director Albert Mugo during the company’s AGM in Nairobi on December 16, 2014. PHOTO | SALATON NJAU
What you need to know:
The Kenya Electricity Generating Company (KenGen) on Tuesday said it will spend about Sh142 billion ($1.5 billion) to exploit steam power at its Olkaria geothermal field.
The additional geothermal power projects will more than double KenGen’s steam power output and comes after the company recently completed connecting the entire 280 MW from Olkaria to the national grid.
KenGen’s current installed geothermal capacity has grown nearly three-fold to 466.1MW from 157MW in December last year.
Electricity generator KenGen has a target to inject another 560 megawatts of geothermal power to the national grid in the next four years, which could offer further reprieve for consumers in form of lower bills.
The Kenya Electricity Generating Company (KenGen) on Tuesday said it will spend about Sh142 billion ($1.5 billion) to exploit steam power at its Olkaria geothermal field.
The increased geothermal generation is expected to offer better returns to shareholders, while helping the company to cut reliance on hydro-power generation which is susceptible to weather changes.
“We will tap indigenous geothermal power to boost our shareholder value. Our focus will be on scaling-up steam generation,” said the KenGen managing director Albert Mugo at the company’s annual general meeting.
The additional four geothermal power projects will more than double KenGen’s steam power output and comes after the company recently completed connecting the entire 280 MW from Olkaria to the national grid.
KenGen’s current installed geothermal capacity has grown nearly three-fold to 466.1MW from 157MW in December last year.
Its generation mix also includes 819.9MW of hydro, diesel fired plants (256.2 MW) and 5.1 MW of wind power from the Ngong windfarm.
The State-owned energy producer is banking on green and cheaper energy sources including wind power to stabilise and grow its earnings.
KenGen’s full-year net profit for up to end of June 2014 halved to Sh2.8 billion, attributed to a higher tax bill and flat growth of its hydro electricity sales to Kenya Power.
It noted in the annual report that electricity sales increased by only one per cent in the year “mainly attributable to low generation from hydro plants which is still our main source of power.”
The company cut its dividend payout by a third to Sh0.40 per share in the period to June.
Development of geothermal power is capital intensive, but it is among the cheapest and most sustainable energy options for Kenya in the long-run.
KenGen will finance the four power projects— each delivering 140 MW of steam—using cash from the planned rights issue set to happen by the first quarter of next year.
“We have already began drilling the steam wells,” said Mr Mugo. KenGen has so far completed drilling about 50 wells out of the required 130 for the project.
Mr Mugo said the company was about to conclude talks with the Treasury regarding the cash call in which KenGen plans to raise Sh15 billion from minority shareholders who control 30 per cent of the firm.
This implies that the State— which owns a 70 per cent stake in KenGen —could spend up to Sh35 billion to defend its stake in the rights issue and bring the size of the cash call to Sh50 billion.
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