Kenya receives Sh10b for geothermal power

By Jackson Okoth

Kenya’s elaborate plan to meet its growing demand for electricity has received a major boost. This follows disbursement of a $120 million (Sh9.96 billion) loan to the Geothermal Development Corporation (GDC) by the African Development Bank (AfDB) to enable it drill for underground power at Menengai.

This is the first geothermal field being developed solely by GDC, a government-owned company responsible for the country’s geothermal development.

The project will also receive a grant totalling $25 million from the scaling-up renewable energy program (SREP) under the climate investments funds for which AfDB is an implementing agency.

"The loans will be critical in affording Kenya an opportunity toward energy sustainability and independence," said Dr Silas Simiyu, Geothermal Development Company managing director.

He made these remarks on Thursday while signing a loan agreement between GDC and the AfDB at a Nairobi hotel.

Menengai has a potential of 1,600 Megawatts. Phase one, which the AfDB has already financed, will generate 400 Megawatts by 2016 to be developed by independent power producers.

"We are happy that the bank is funding two drilling rigs and overseas supplies enough to drill 90 wells," said Simiyu.

AfDB is also funding procurement of a modular power plant to supply power to the rigs and camping facilities, drastically reducing cost of drilling. GDC has already initiated the process of pre-qualifying bidders for construction of required power plants at Menengai.

Apart from providing employment opportunities, the Menengai project will also provide water for domestic use to the surrounding community.

The Menengai project entails development of the steam field by GDC and then selling it to power plant developers. "We shall invite investors to participate in steam field development through a joint development arrangement," said Simiyu.

"The total funding envelope is for the Menengai project is $ 24 billion with financial engineering still ongoing," said Gabriel Negatu, regional director, AfDB East Africa.

Development of the Menengai field is expected to set the stage for investments that will help meet Kenya’s rapidly increasing demand for power and transform the country into a competitive clean energy economy.