Agency refuses to pay Sh50m more for power project

Taxpayers will not have to pay an extra Sh50 million for the planned Menengai geothermal project, the Geothermal Development Company (GDC) has said.

The project, which had an initial budget of Sh4.2 billion, has been delayed for four years.

State funding

In January 2014, GDC contracted H Young & Company Limited to gather steam for the production of geothermal power for two-and-a-half years.

But four years later, H Young & Company has yet to hand the project to GDC.

This has raised fears that the project cost variations arising from the delay could be extended to taxpayers.

There have been reports that the contractor has demanded an extra Sh50 million this year.

GDC Managing Director Johnson ole Nchoe said the company had turned down H Young’s request for cost variation.

Mr Nchoe attributed the delay in the execution of the contract to challenges in getting money from Treasury. The State is fully funding the project.

“I am happy to report that after the long delays, the project is now complete and the contractor will soon hand it over to us,” he said.

There have also been fears that the project might not offer enough steam to produce the needed power.

But GDC General Manager for Resource Development Cornel Ofwona dismissed the claims, saying the Menengai field had enough steam to generate 105 megawatts (MW).

Mr Ofwona said Quantam East Africa Power Limited - one of the three independent power producers (IPPs) - has secured funding from the African Development Bank to generate about 35 MW of power.

The other two IPPs licensed by GDC are Orpower 22 Limited and Sosian Menengai Geothermal Power Limited.

Power generation

“We expect Quantam to start construction of their power plant either in March or April this year,” Ofwona said.

He explained that GDC was not to blame for the delay in power generation.

Instead, he blamed the IPPs, which he said were still negotiating funding with their financiers.