African Union grants Sh714m to private geothermal project in Kenya

By Macharia Kamau

An independent power producer Africa Geothermal International Limited (AGIL) is embarking on a Sh52 billion ($600 m) power project at the Longonot steam fields that is expected to generate 140 megawatts (MW) of electricity upon completion in 2017.

The firm said it would start drilling exploratory wells at its 132 kilometre square field at Longonot next year and expects to start feeding 70MW of electricity to the national grid by 2016. The plant will then be scaled up to produce 140MW by the following year.

“It is estimated that during the construction phase, the Longonot geothermal plant will employ up to 1 000 people for close to $600 million of investment,” said Fassine Fofana chief executive AGIL.

The project is expected to contribute significantly to Kenya’s energy pool and help reduce the average prices charged to the consumer. This will be achieved by displacing relatively more expensive fossil fuel based power.

Fofana spoke when the firm signed a Sh714 million ($8.4m) grant agreement with the Africa Union Commission (AUC) that would enable it undertake geothermal exploration activities at Longonot.

The AUC in partnership with the KfW Bank Group – German Development Bank – committed to grant AGIL the $8.4 million to support exploration drilling of the geothermal resource in Longonot. The money is part of $36 million that the firm needs during its exploration phase.

Fofana explained that the Geothermal Risk Mitigation Fund grant agreement signed between the Commission and AGIL was a sign of commitment to find renewable and sustainable energy.

He said the firm would seek funds from both local and foreign investors – a mix of debt and equity – for the remainder of the project.

The ministry of Energy licensed AGIL in 2009 to undertake geothermal power production at Longonot.

The licence allows AGIL to build a geothermal power plant and use the geothermal resources within the 132km square area for a period of 30 years from the effective date of the power purchase agreement (with the option for a five year extension).