This archive report was first published on 8 November 2019.
On November 5, 2019, Kengen made a groundbreaking announcement, inviting international financiers to collaborate on a 140MW power plant project in Olkaria, Nakuru County. This pioneering move marked KenGen's first-ever Public-Private Partnership (PPP), a significant step towards cementing its position as a global and regional leader in renewable energy production.
The project, which will be built on a Build, Own, Operate, Transfer (BOOT) basis, requires bidders to commit to financing, designing, constructing, commissioning, and operating the new power plant. In return, Kengen will provide steam for an agreed period of 25 years through pre-drilled wells, estimated to produce enough steam with a 20% buffer.
Furthermore, KenGen has signed a 25-year power purchase agreement with Kenya Power, ensuring stable revenues for the investors. Pursuant to the Special Purpose Vehicle (SPV) clause under the PPP Act 2013, the Geothermal giant will also inject a cash investment to own 25% of the project.
By adopting this new financing model, Kengen aims to reduce costs and lower its borrowing rate. This move is in line with Kenya's vision 2030 blueprint, which aims to achieve 100% renewable energy use. Currently, Kengen is the largest power producer in Kenya, contributing to 80% of the country's power, with a production capacity of 2,712 MW, surpassing the current peak demand of 1,882 MW.
The PPP bid closes in December 2019, marking a significant milestone in Kengen's journey towards a more sustainable and efficient energy production.
