Plans in top gear to set up Olkaria VI power plant - KBC

Plans by the Kenya Electricity Generating Company PLC (KenGen) to set up the first phase of Olkaria VI 140MW Power Plant in Naivasha are in top gear following the shortlisting of bidders for the project.

This follows the approval by the National Treasury to implement up to 560MW of Geothermal Power Projects under the Public-Private Partnership (PPP) framework,

The project entails the development of a geothermal power generation plant on a Build, Own, Operate and Transfer (BOOT) basis.

The Successful Bidder will enter into a joint venture with KenGen and will finance, construct, own and operate the power plant and the associated facilities and transfer the Project back to KenGen at the end of the operational term.

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This will be the first Public-Private Partnership (PPP) Project to be developed by KenGen under the PPP Act 2013 and the PPP Regulations 2014.

The PPP process is being undertaken by KenGen with oversight from the PPP Unit and supported by a team of Transaction Advisors.

Ormat Technologies Inc, ITOCHU Corporation, Sumitomo Corporation, Enel Green Power and a consortium of Engie Energie Services, Toyota Tsusho Corporation, Kyuden International Corporation and DL Koisagat Tea Estate were shortlisted as qualified bidders and gazetted on Friday, May 8th, 2020.

the successful Bidder will enter into a Joint Venture with KenGen and incorporate a special Purpose Vehicle (SPV) in accordance with the laws of Kenya. KenGen will be a shareholder in the SPV and will enter into a long-term power purchase agreement with Kenya Power.  The SPV will enter into a long-term steam supply agreement with KenGen. The Project will then transfer to KenGen at the end of the PPA term.

In the past, KenGen has financed its power projects through syndicated debt funding sourced primarily from multilateral and bilateral institutions, locally raised debt (infrastructure bond), own equity and state-to-state concessionary funding.

Due to the heavy capital investment required to develop power projects, KenGen found it necessary to have private investors take an active part in the development of its power projects to achieve a fast capacity expansion program.

The PPP project will ensure a quick rate of conversion of steam into power while reducing risks and debt burden for KenGen. It will also enable technology transfer and capacity building.