ETHIOPIA – The Kenya Electricity Generating Company (KenGen), the largest power producing company in Kenya, has won a US$52 million 1.514 billion birr) tender to drill geothermal wells in Ethiopia.
The new deal marks the second win in Ethiopia within a period of about four months.
According to Moses Wekesa, Business development director at KenGen, the firm has reached an agreement with an independent power producer (IPP), Tulu Moye Geothermal Operations Plc, located in the eastern region of Ethiopia, to drill wells and offer geo-scientific survey, reports Business Daily.
This will be the second such tender for KenGen in the horn country after it announced February that it has won part of a US$76 million (2.213bn birr) contract to supply geothermal drilling services to the Ethiopian Electric Power (EEP).
The project was financed by the World Bank through a $76 million loan granted to the Ethiopian government and is being implemented in two phases.
“We bid and the first bidder fell off. We were the second best evaluated bidder. The IPP has now engaged us in discussion. We have negotiated and settled,” said engineer Wekesa during the recent energy debate convened by QLand Energy Communications Consultancy.
“We will be providing geo-scientific survey and drilling eight geothermal wells. One geothermal well costs about Sh650 million (US$6.5 million),” he added.
Wekesa said that Ethiopia has reached an agreement with KenGen for the supply of about 30 percent of the component of phase II which translates to about US$6.2 million (180.54 million birr).
Mr Wekesa noted the latest win will deepen KenGen’s vision to diversify revenue streams, riding on experience in the energy space.
“We have over the period developed a very solid experience in human capital especially in geothermal and we have been seeking opportunities to export our expertise,” said Mr Wekesa.
The company is also eying Rwanda and Djibouti for geothermal project, having hosted Djibouti President Ismail Omar Guelleh at the Olkaria geothermal fields in Naivasha last year.
Although the geothermal potential of Ethiopia has been estimated to be as high as 10,000 MW, there has been no commercial breakthrough for geothermal power in the country.
The 2,300 MW of installed capacity from renewable sources is vastly insufficient to serve their population of over 100 million people.
Ethiopia has a lot to gain by developing their renewable energy sector. Currently, only about 43 percent of the population in Ethiopia has access to electricity.