Power utility Kenya Electricity Generating Company (KenGen) has injected life into plans to implement geothermal power projects that have failed to take off owing to a financial crunch.
About two years ago, KenGen announced it intended developing up to 560 MW of geo-thermal power generation capacity at the Olkaria field in phases of 140 MW each through public–private partnerships (PPPs).
After efforts to attract companies to design, finance, supply, construct and operate the power plant for 10 to 20 years hit a brick wall, largely owing the intensive capital requirements, the company has decided to change tack in terms of financing the projects, which are critical in meeting Kenya’s energy needs.
KenGen, which generates over 70% of Kenya’s electricity, is now looking for lead and financial transaction advisers to help the com-pany in the identification, procurement and selection of a private investor to undertake the first 140 MW phase.
“The qualified transaction advisers, having work experience or doing transaction advisory services in similar infrastructure projects, will be required to structure the project and advise KenGen on the identification, procurement and selection of a private investor for the project, including successful commercial and financial close,” says the company in a statement.
The decision to use a transaction adviser comes after a process led by the company about two years ago failed to attract any interested investors.
The company is reeling from a $900-million loan procured from various international financial institutions to finance the ongoing 280 MW Olkaria project.
The plant, being built by a consortium comprising Tsusho Corporation, of Japan, and Hyundai Engineering & Construction, of South Korea, at a cost of $1.3-billion, is slated for completion later this year.
KenGen plans to increase its installed capacity to 3 000 MW by 2018 from the current 1 252 MW, a target that can only be met through PPPs.
Over the next five years, the company requires about $4.5-billion to finance its activities and it intends to raise the funds through a rights issue, bonds and concessional loans.
Kenya, East Africa’s largest economy, has set itself the target of generating at least 5 000 MW of electricity from geothermal sources by 2018. The country has identified more than 14 high- potential geothermal sites along the Rift Valley that can generate between 7 000 MW and 10 000 MW.