Kenyan firm joins 16 picked for Olkaria power project

A Kenyan-listed firm is among the 16 companies picked by the local power producer to spearhead the initial construction of the Sh82.5 billion geothermal power plants at Olkaria fields.

TransCentury has joined three other firms — South Korea’s Daewoo International, Zambia’s Copperbelt Energy Consortium and Japanese Sumitomo — to fund the ambitious project by KenGen under a joint venture agreement option.

KenGen’s outgoing managing director Eddy Njoroge says the local firm is among 16 that passed the evaluation and qualified for the investment venture that will lead to an additional 280MW of electricity in the national grid.

“Given the high capital cost associated with drilling steam wells and building power plants, we plan to explore the public–private partnership route,” he said last week during an investor briefing.

Last year KenGen asked interested bidders and consortiums to express interest in the development of the plant.

At the closure of the expression of interest period, 21 firms had submitted their responses.

Seven firms qualified under the energy conversion agreement, four won the bid under the venture and energy conversion agreement and five qualified under both arrangements.

Four Japanese firms – Kansai Electric Power (Kepco), Mitsubishi Corporation, Toyota Tsusho and Mitsui –join Sithe Global Consortium (America), Zorlu (Turkey) and the pan-African Consortium of Africa Finance Corporation under the energy conversion agreement.

India’s largest integrated power company Tata Power, Ormat (Israel), Marubeni (Japan), Sojitz (Japan) and the South African subsidiary of International Power (India) qualified under the both arrangements.

Last year President Kibaki kicked off the construction of the country’s largest green energy generation plant.

KenGen will start with one unit with the capacity of generating 140MW of electricity to be completed next year.

The Olkaria fields have two other plants – Olkaria I and Olkaria II – and generate 150MW of power.

The geothermal power project is expected to be completed in 2016 and reduce the country’s over-reliance on hydrogenation.

It is funded jointly by the Kenya Government, World Bank, Germany’s Development Bank KfW, European Investment Bank, Japan International Corporation Agency, French Development Agency AFD and KenGen.

The project is part of the government’s Vision 2030 plan to raise power output to 3,750 MW by 2018 and more than 15,000MW by 2030 to meet growing electricity demand.

Chinese Exim Bank has already advanced KenGen Sh33.3 billion ($386 million) to fund the ongoing drilling of 80 wells.KenGen has also lined up Kenya’s first ever asset-backed bond sale that is expected to raise Sh30 billion to finance its geothermal expansion plans.