On Tuesday, Kengen put out a bid inviting International financiers to bid for its first-ever Public-Private Partnership (PPP).
The call is looking for partners and investors to construct a 140 MW Power plant in Olkaria, Nakuru County. The project is set to be on a Build, Own, Operate, Transfer (BOOT) basis. This new project puts the company’s dream a step closer to cementing its place as a global and regional leader in renewable energy production.
The bidders will commit to finance, design, construct, commission, and operate the new power plant.
Through a Steam Sale Agreement within the PPP, Kengen will provide steam for an agreed period of 25 years. This will be through pre-drilled wells which are estimated to produce enough steam with a 20% buffer.
It has also signed a 25-year power purchase agreement with Kenya Power which means the project will provide stable revenues to the investors.
The Geothermal giant will put in a cash investment to own 25% of the project through the Special Purpose Vehicle (SPV) clause under the PPP Act 2013.
Over the years, Kengen has been financing its projects through government & commercial loans. The current debt maturity averages at 15.3 years over the past 5 years, with the average cost of debt standing at 3.10%.
This new way of financing will undoubtedly help in cutting costs for the power giant and also reduce the rate of borrowing to put up power plants.
It will also address the main challenge in power generation in Kenya and Africa i.e financing and technical capacity. In addition, it will provide opportunities for investors to invest in renewable energy.
With this new project, Kengen is making it a step closer to Kenya’s vision of attaining a 100% renewable energy use. Kengen is currently the most significant power producer in Kenya, producing 80% of power in the country. Now its producing 2,712 MW of power surpassing the current peak demand of 1,882 MW with power access amounting to 75%. The PPP bid closes in December 2019.