KenGen Signs Ksh.7.6 Billion Geothermal Drilling Contract for Ethiopia

Kenya’s electric generator, Kengen, together with the Shandong Kerui Group of China has procured a 7.6 billion-shilling contract to supply geothermal electricity drilling services to Ethiopia’s Electric Power (EEP).

The project is funded by the World Bank and it will feature the implementation of drilling rigs and accessories as well as rig operation and maintenance for drilling geothermal wells at Aluto, Ethiopia.

The deal was awarded in December 2018 after the two firm’s consortium made a bid and it was signed last week by KenGen CEO Rebecca Miano and her EEP counterpart Abraham Belay.

“As we extend our services to Ethiopia, we are leveraging on our expertise, in-depth knowledge of the African Rift Valley and close to four decades of successful drilling experience,” Ms. Miano said.

Belay noted that Ethiopia had been trying to venture into geothermal power for many years since 1981 but was yet to reach a significant milestone.

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“Currently, we have some geothermal drilling rigs that are idle and now broken down and therefore the need to purchase new ones,” he said.

The project is good news for KenGen, as it is a boost to the NSE-listed firm’s revenue.

“We are delighted to announce that our diversification strategy is finally paying a dividend. This is good news for KenGen, our shareholders and indeed for Kenya as a country,” she said.

The project will feature two implementation phases, phase I which is the purchase of drilling rigs and Phase II which entails the provision of drilling services.

About 30 percent of the component of Phase II will be supplied by KenGen. This translates to approximately 620 million shillings.

Kenya is currently Africa’s leading geothermal power producer and is one of the top 10 across the globe.

It has a geothermal installed capacity of 685MW with an estimated potential of 10,000MW along the Rift Valley. This potential is being harnessed in Olkaria, Menegai and Eburru fields.

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Olkaria I, was the first geothermal power plant in Africa. Its first unit featuring a 45-megawatt (MW) plant was commissioned in June 1981, the 2^nd, and the 3^rd units were subsequently commissioned in November 1982 and March 1985, respectively.

The signing of the deal is finally a breakthrough for Ethiopia, which has been waiting for the chance in more than three decades.

KenGen carries out training programs for local and international students seeking knowledge on green energy, something that the country has turned its focus on as part of its national grid.

Geothermal is the biggest power source, accounting for 44.6 percent of electricity generation mix while hydro is second at 29.8 percent.