Leading power generating company, Kengen is not showing any signs of slowing down with the announcement of upcoming plans for 140MW Olkaria VI. The construction of the new power plant will be under a PPP. KenGens’ first PPP under the PPP act of 2013, and PPP regulations 2013.
The nod comes after the national treasury approved up to 560 MW implementation of geothermal projects through the PPP Act 2013. The first phase Olkaria VI in Naivasha will generate 140MW.
This will go along way in increasing the countries renewable energy capacity even as the country aims for 100% renewable energy capacity. Kenya recently overtook Italy for 7th in the worldwide geothermal energy producers.
In 2019, Kengen Invited bidders for a Build Own Operate Transfer (BOOT) joint venture in which they will finance, construct, operate the new power plant then transfer it back to KenGen. So far, eight bidders have been short-listed. These companies include; Ormat Technologies Inc, ITOCHU Corporation, Sumitomo Corporation, Enel Green Power, and a consortium of Engie Energie Services, Toyota Tsusho Corporation, Kyuden International Corporation as well as DL Koisagat Tea Estate. They will ultimately proceed to the Request for Proposals stage in which one will be selected in June 2020.
The Joint agreement with the bidder will see the parties get into a SPV ( Special Purpose Vehicle) where Kengen will have a Power Purchase Agreement with KPC. On the other hand, it will enter into a Steam Supply Agreement with SPV in which it is a shareholder. Later, the project will be transferred to Kengen when the PPA term is over.
Previously Kengen has been financing its power projects either through dept funding or through infrastructure bonds. the allowance of PPP will certainly create an opportunity to bring in Private companies who have the readily available financial muscle and innovative technology as well as reduce cost burdens to government agencies due to exceeding operation costs.