KenGen clinches deal to drill geothermal wells in Ethiopia

KenGen Geothermal Plaza offices in Naivasha. [File, Standard]

The Kenya Electricity Generating Company (KenGen) will drill geothermal wells for a power project in Ethiopia.

The Horn of Africa country has recently accelerated its efforts to tap its geothermal electricity potential.

In a major boost to KenGen’s diversification of revenue streams, the company will earn Sh621 million by drilling wells for Ethiopia Electric Power (EEP).

The power producer has in the recent past tried to grow its revenue streams to cut its reliance on the traditional sale of electricity to Kenya Power.

Among the key areas it is looking at is offering drilling services to local and regional firms that plan to produce power through geothermal steam.

“As we extend our services to Ethiopia, we are leveraging on our expertise, in-depth knowledge of the African Rift Valley and close to four decades of successful drilling experience,” said KenGen Chief Executive Officer Rebecca Miano.

Ms Miano signed an agreement with her EPP colleague, Abraham Belay, during the weekend. KenGen had bid to drill the wells with a consortium, Shandong Kerui Group of China.

Dr Belay said Ethiopia had tried to venture into geothermal development since 1981, but had yet to make a commercial breakthrough.

“Currently, we have some geothermal drilling rigs that are idle and now broken down, therefore the need to purchase new ones,” he said.

“We will be delighted to have you build the capacity of our people to be able to manage the equipment and run the power plants even after you exit the sites.”

The contract, which is for the implementation of drilling rigs and accessories as well as rig operation and maintenance for drilling geothermal wells at Aluto, Ethiopia, is financed by the World Bank through a loan to the Ethiopian Government to the tune of $76.8 million (Sh7.68 billion).

The project will be implemented in two phases, with the initial deal entailing purchase of drilling rigs while Phase II will entail provision of drilling services.

KenGen will supply about 30 per cent of the Phase II component, which translates to about Sh620 million.