GDC managing director Silas Simiyu (left) with Gabriel Negatu, a director of African Development Bank, at a past function. The agency will seven new wells. Photo/File
What you need to know:
Work on the seven fields of Bogoria, Azuri, Baringo, Korosi, Silali, Lipaka and Chepchuk will start in April, bringing to 20 the number of wells drilled and planned in the country.
Seven geothermal wells will be drilled in the Bogoria/Silali area as the government diversifies into new fields outside the traditional Menengai and Olkaria zones.
Geothermal Development Company (GDC) says it has received $400 million (about Sh34 billion), $300 million of it from US Exim Bank and $100 million from KfW, a German development bank, for the project.
Work on the seven fields of Bogoria, Azuri, Baringo, Korosi, Silali, Lipaka and Chepchuk will start in April, bringing to 20 the number of wells drilled and planned in the country.
The parastatal says it intends to reduce the overall cost of developing geothermal power by relying on credit from development finance institutions.
It has so far drilled eight wells in Menengai, five of which are generating 40 megawatts (MW) of power, under $600 million (Sh51 billion) loans and grants from the African Development Bank (AfDB) and the French Development Agency (AFD). The wells were underwritten by the World Bank.
The new loans, with a grace period of 10 years and a tenor of 40 years, will translate into lower investment per unit, affording cheaper industrial and household power.
GDC managing director Silas Simiyu said Marine Power Generation (MPG) Company Ltd, a private investor, is also about to start drilling near Akiira Ranch, Mlima Panya and Mount Margaret in Suswa.
MPG will produce steam, build a geothermal power plant and use the geothermal power resources within the concession area for 30 years with options of two separate five-year extension. Environmental watchdog Nema says MPG submitted an impact assessment (EIA) report in December.
Africa Geothermal International Ltd (AGIL) is also licensed to exploit confirmed Longonot, Suswa and Akiira Ranch sites and is planning to drill.
The Suswa fields are funded by export-import banks from India. Under the contract, investors are supposed to start exploitation within two years after award, drill three wells in three years and put up a power generating plant within five years.
They are also supposed to do preparatory work like EIA and run feasibility studies.
Dr Simiyu says new fields will be developed on public private partnerships (PPPs). Three fields — Olkaria, Olkaria West (OrPower IV), Longonot (AGIL) licensed prior to the setting up of GDC in January 2009 — will, however, explore, drill and build power plants uninterrupted.
“All the fields that are not concessioned are now under GDC. PPPs will apply on all fields going forward. Investors can buy steam from GDC and put up the power plant,” said Dr Simiyu.
“Only investors making progress will be allowed to stay on the licensed fields. The Suswa is reverting to GDC because WalAm made no progress within the contractual agreement.”
In December last year, the government cancelled the licence of WalAm Geopower Inc, a US firm, which had been licensed in September 2007 and repossessed the fields over non-performance.
“The contract was between WalAm and the Government. The contract was breached and the fields are being taken away,” said Dr Simiyu.
Kenya can generate 7000 MW from geothermal sources and is targeting at least 5000MW by year 2030.
