KenGen, Obama’s Power Africa ink capital, tech deal

A geothermal well at Menengai Crater. PHOTO | SULEIMAN MBATIAH
A geothermal well at Menengai Crater. PHOTO | SULEIMAN MBATIAH  

Electricity producer KenGen will enter into joint ventures with American companies for capital and technical support in the construction of new wind and geothermal power plants following a partnership deal.

KenGen, which is majority-owned by the government, Wednesday inked a deal with US President Barack Obama’s Power Africa initiative in what puts the company on course to more than double the country’s energy generation capacity.

The utility firm plans to generate additional 2,500 megawatts (MW) in 10 years at a cost of Sh900 billion ($9 billion), lifting the country’s total installed power capacity from the current 2,294 MW.

“The joint ventures are significant in bringing in capital and technical expertise,” the managing director Albert Mugo said yesterday during the signing of the pact with Power Africa-Kenya, the local arm of Mr Obama’s project.

Only 53 per cent of Kenyan homes are currently connected to the national power grid.

Power Africa will separately benefit consumers in several countries in sub-Saharan Africa including neighbouring Ethiopia, Uganda, Tanzania and Rwanda.

American companies have committed to invest up to Sh1.8 trillion ($18 billion) in the Power Africa Initiative, according to US Ambassador to Kenya Robert Godec.

Mr Godec said that the pact with KenGen will see American agencies like USAID and the Overseas Private Investment Corporation offer project transaction support, finance, procurement, guarantees and legal assistance.

Some of the projects that will benefit from the partnership with Power Africa are Olkaria 5 (140 MW), Olkaria 1 unit 6 (70 MW), refurbishment of Olkaria 1 (51 MW) and phase 1 of Meru wind farm (100 MW), according to Mr Mugo.

The country has untapped potential of about 10,000 MW of geothermal energy in its Rift Valley steam belt but the huge cost involved has slowed down project implementation.

KenGen, which is listed on the Nairobi Securities Exchange, has a capacity of 1,617 MW or about 70 per cent of Kenya’s installed power capacity.

Out of the firm’s capacity, 820 MW is hydro-generated, 513 MW from geothermal wells, 25 MW from wind farms while the rest is from its diesel generators.

Independent power producers (IPPs), mainly diesel generators, account for the rest of the country’s capacity.

Geothermal energy currently accounts for the largest share (about 49 per cent) of the power consumed by homes and businesses.