HomeRegional NewsEast AfricaKenyan parliament guarantees US$1.3 billion power loan

Kenyan parliament guarantees US$1.3 billion power loan

One of Kenyan power
operator Kengen’s existing
geothermal power plants “’
another one is on the way
Nairobi, Kenya — ESI-AFRICA.COM — 10 November 2011 – Parliament in Kenya has approved a Treasury guarantee for an international loan for the country’s public power generator KenGen, paving the way for a geothermal project that could add 280 megawatts (MW) “’ a fifth of existing supply “’ to the national grid.

The US$1.3 billion project in Olkaria, Naivasha, will be completed in mid 2014, raising the Kengan’s geothermal output to 315MW.

On Monday, KenGen signed the construction contract with the winning consortium of Toyota Tsusho Corporation of Japan and Hyundai Engineering Company Limited of Korea, who submitted the lowest joint bid to beat three international engineering firms: Marubeni Corporation of Japan, a JV of Mitsubishi Heavy Industries and Mitsubishi Corporation of Japan, and a consortium of Iberdlora and Alstom of Spain and Mexico.

The lowest bidder offered to generate 1MW of power at about US$10 million from the previous rate of about US$14.5 million. “We have an ambitious plant delivery schedule in 27 months. The second unit will be ready by May 2014,” said KenGen managing director Eddy Njoroge at the signing ceremony.

The Government is financing the drilling of wells in the project, which is co-funded by KenGen, the World Bank, the European Investment Bank, the Japan International Corporation Agency, and the French Development Agency.

“The more than US$300 million saving in the project’s cost is enough to build another power plant,” said energy assistant minister Mohamed Mahamud. He asked the consortium to stick to the timeline and the project’s cost. Toshiba Corporation will supply four 70MW steam turbines and generators by Hyundai Engineering, the full turn-key contractor for the plant that is Africa’s largest.

Financial closure for Olkaria I geothermal power project, unit four and five “’ that should add 140MW of power to the national grid and double KenGen’s production of the efficient, reliable and eco-friendly energy source “’ was reached in June last year.

Completion of three thermal power plants with a combined capacity of 252MW was pushed back last year after delays in securing similar insurance protection.
Electricity demand in Kenya is growing at 8% per year and a deficit of 20% exists during peak demand.

Energy PS Patrick Nyoike said the World Bank had agreed to underwrite the steam fields and boost investor interest in geothermal energy development and spur more projects in the country. Kenya is targeting to develop 5,000MW of geothermal power by 2030.