Akiira One, a geothermal power producer partly owned by Centum Investments, says it is in the final stages of obtaining approvals for a Sh27.1 billion 70-megawatt plant.
The firm said it is waiting for industry regulator Energy Regulatory Commission (ERC) to approve a contract with distributor Kenya Power. The agreement is expected to spell out the price of power generated from the Olkaria-based plant.
“We are now awaiting approval by the ERC for our Power Purchase Agreement (PPA),” Akiira chief executive Robert Bunyi told the Business Daily.
Akiira One is jointly owned by listed Centum and Frontier Markets, a Danish investment firm.
The two will contribute 30 per cent (Sh8.1 billion) of the project’s $300 million (Sh27bn) cost while the remaining Sh19.9 billion is in the form of a commercial loan from a local bank.
Akiira One already received Sh86 million grant from the Overseas Private Investment Corporation (OPIC) in October as part of President Obama’s Power Africa programme.
The grant is to pay for the technical and legal work needed before drilling begins. The promoters will drill the wells, a task conventionally undertaken by the government through the Geothermal Development Corporation.
The parastatal normally drills steam wells then invites companies to develop the power plants, which reduces the high risks involved in the early stages of development for private investors.
Ram Energy and Marine Power will construct the power plant. Ram Energy said the form of financing where agencies such as OPIC pay for early and risky stages of development should attract other American firms to put up plants in the Rift Valley area.
“We believe Kenya offers strong opportunities for private investment in geothermal energy and a partnership with OPIC allows us to more effectively manage risks,” said Ram Energy Ram Hezy in a statement announcing the grant.
Akiira One will add another 70MW by December 2018, bringing the total to 140MW over the next four years.
Centum is also targeting power production through its proposed Lamu Coal power plant expected to add another 960 MW to the national grid.
Ormat Power, another US firm, recently said it would increase power production at its Olkaria-based plant by 24 megawatts