US firm Ormat flags Kenya Power payment delays

Business Reporter

Nation Media Group

US energy firm Ormat Technologies has flagged delayed payments from Kenya Power, even after the utility paid it $21.1 million (Sh2.72 billion) earlier this year as part of overdue obligations for electricity purchases from its geothermal plants in Olkaria, Naivasha.

Ormat said collections from Kenya Power have slowed in recent times, with the American firm owed $8.4 million (Sh1.08 billion) as of the end of February 2026.

Kenya Power owed Ormat $29.5 million (Sh3.8 billion) for electricity supplied in 2025. The utility, however, paid $21.1 million (Sh2.72 billion) in January and February this year.The State-owned electricity distributor has, in recent times, grappled with overdue payments to independent power producers (IPPs). The delays were exacerbated in 2023 at the peak of the dollar crunch.Kenya Power’s agreements with power producers are backed by letters of support from the Government of Kenya. The letters act as security in case of non-payment tied to political strife or government actions.Ormat sells electricity to Kenya Power under three 20-year power purchase agreements (PPAs) covering four plants. One of the PPAs will lapse in 2033, two in 2034, and the last in 2036.Under the PPAs, power producers can trigger punitive interest clauses contained in the agreements. These penalties are treated as operational costs and are factored into electricity tariffs.Ormat, through its wholly owned subsidiary OrPower 4, operates geothermal plants within the Olkaria III Complex in Naivasha. The plants have a combined maximum production capacity of 150 megawatts (MW).The American power producer is one of 30 firms currently contracted by Kenya Power to supply electricity under varying wholesale prices. These prices are key in determining retail power costs.Read: Ministry seeks tax breaks to hold geothermal power below Sh9 a unitProfit reboundConcerns from the American firm come at a time when Kenya Power is reporting improved performance, boosting the utility’s ability to service loans and pay for electricity supplies.Kenya Power recorded consecutive net profits in the past two financial years, with the latest at Sh24.47 billion in the year ended June 2025, down from a record Sh30.08 billion a year earlier.The profits, driven by increased electricity sales, have strengthened Kenya Power’s ability to pay for electricity supplied by producers, alongside paying dividends to shareholders.Read: Kenya Power raises interim dividend 50pc on profit growthKenya is the third-largest market for Ormat in terms of revenue, after the US and New Zealand.For example, Ormat’s revenues in Kenya stood at $117.422 million (Sh15.16 billion) as at December 31, 2025, accounting for 11.86 percent of the $989.54 million (Sh127.79 billion) the company generated globally during the period.

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US firm Ormat flags Kenya Power payment delays

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