KenGen gets Sh7.4b geothermal funding

May 3, 2011

, NAIROBI, Kenya, May 3 – The Kenya Electricity Generating Company (KenGen) has signed a Sh7.4 billion (60 million Euros) loan agreement with the German Development Bank (KfW) to partly finance geothermal development in the country.

KenGen Managing Director Eddy Njoroge said the funds will funding the extension of Olkaria I and Olkaria IV which are estimated to total cost approximately Sh83billion.

"The component that has been given by KfW is to fund the consultancy services and also to finance the steam field development. Together with the World Bank, they will be funding the interconnection of these steam wells," he explained.

The entire project is also being co-financed by the European Investment Bank, Japan International Corporation Agency, AfD of France alongside KenGen and the government of Kenya.

The scope includes drilling, power plant development, steam field development, sub-station, consultancy and administrative services. Tender documents for the steam fields will be issued this week to the three pre-qualified bidders.

The terms of the loan are favourable with the loan period being 15 years and a grace period of three-and-a-half years at an interest rate of three percent.

This is billed as the most ambitious project undertaken by the company and comprises two new units at Olkaria I power plant with an output 140 MW and the new Olkaria IV plant with a similar output. The two projects are scheduled to be completed in December 2013.

These are some of the projects the government has been aggressively pursuing to enhance power generation capacity to match and exceed growing demand which is estimated at eight percent per year.

The projects are also expected to help reduce Kenyans\’ dependence on hydro generated electricity.

By 2013, power generator hopes to have an installed capacity of 1,800MW which will be a mix of hydro, wind and geothermal energy.

Currently, the country is at 1,400MW but this capacity is expected to be increased to 3,000MW by 2018 as the government moves towards geothermal.

Kenya\’s potential is estimated at 7,000MW and with the unlocking of this renewable energy the government targets to have produced 5,000 megawatts in the next 20 years.

With the harnessing of this potential, Kenyan consumers can be guaranteed of affordable and predictable power.

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