KenGen kicks off search for Olkaria geothermal power plant partner

The Kenya Electricity Generating Company (KenGen) is searching for a transaction adviser to help structure a public private partnership (PPP) deal for the multibillion-shilling first phase of its Olkaria VI power plant.

The power plant is expected to generate 140 megawatts (MW) and is part of the company’s plan to increase its geothermal output by an extra 350MW in the next four years.

This will be the first time that KenGen will be undertaking a PPP deal. The transaction will be structured as a build-own-operate-transfer arrangement where ownership will revert to KenGen from the private investor after 15 years.

“The TA (transaction advisor) will prepare a feasibility study consistent with the PPP Act, recommend the best PPP model for the procurement, advise KenGen on the optimum risk allocation and the resultant contract structure, develop transaction documents for the procurement and provide transaction advisory support through to financial close of the project,” says KenGen in an advertisement.

The majority State-owned KenGen has already drilled the wells for the project. Olkaria VI will be in four equal projects of 140MW each and this will be the first of the four. All 560MW will be developed under a PPP arrangement.

KenGen plans to increase its installed capacity to 3,000MW by 2018 mainly from geothermal sources.

Olkaria VI’s development will follow Olkaria V which is expected to kick off before the end of the year. The company has already hired consultants for the project and is in the process of selecting contractors, while negotiations for funding are in progress.

It is focusing on geothermal power to avoid the weather-related fluctuations in amount of power produced from hydro generation.