For a planned 140 MW geothermal project, KenGen is seeking a majority shareholder in a public-private-partnership model supplying steam under contract to the project while holding a 25% stake in the plant. There are though concerns as new PPAs are currently under review by Kenya Power.
As part of the released tender for pre-qualification of companies to build, own, operate and transfer (BOOT) a new 140 MW Olkaria geothermal power project, details emerge.
Under the proposed structure, KenGEn aims to enter a joint venture with an external investor for the project so Business Daily in Kenya.
Under the special purpose vehicle, the participating entity will help finance and develop the planned 140 MW geothermal power plant in Olkaria, with KenGen holding a 25% stake, while the external partner will hold 75% in the joint venture.
“KenGen has drilled and tested all production wells required for the project and will be responsible for the operation, maintenance, and management of steam supply to the project,” said KenGen. “The SPV will be responsible for the development, design, financing, construction, operation and maintenance of the project.”
For the project, KenGen will enter a long-term power purchase agreement with Kenya Power as off-taker and a long-term steam supply agreement with the SPV, as it will buy steam from KenGen.
There are though concerns, as currently several large scale electricity generation projects are in some limbo, after distributor Kenya Power indefinitely froze the signing of new power purchase agreements (PPAs), citing financial constraints and excess capacity. Kenya Power has currently 23 PPA applications under consideration with a generation capacity of 2,240.5 megawatts.