Kenya's Kengen To Raise $12 Billion For New Plants
Author: Beatrice Gachenge
Kenya Electricity Generating Company (KenGen) said on Monday it planned to raise $12 billion to build six geothermal power plants that should generate 585 megawatts by 2016, as it pushes to diversify its power sources.
KenGen's Managing Director Eddy Njoroge told Reuters that his company was open to different financing models to raise the financing required.
Kenya is the first African country to drill geothermal power, tapping vast steam energy.
Although expensive to drill initially, development of cheaper geothermal power means the country has to rely less on thermal power, prone to the vagaries of high international prices, and rain-fed hydroelectric dams.
"We are open to different financing models," said Njoroge, in an interview at the Ol Karia power plant in the Rift Valley north west of Nairobi.
"We will be looking at different options like joint ventures ... The most viable one is build and transfer. We have the steam, we want somebody to come and build the plant and then operate it (to recover the cost) and then transfer it to us."
The east African country -- the biggest economy in the region -- has the potential to produce 7,000MW of geothermal power and KenGen, the country's main power producer, is targeting production of at least 5,000MW by 2030.
Kenya's peak electricity demand has risen to 1,200MW, compared with 780MW in 2002, driven by economic growth.
KenGen produces 1,141MW and the rest is generated by independent power producers which mostly rely renewable energy such as wind power.
"My biggest nightmare is that demand is growing and the question is, are our projects in tandem? Are we implementing as much as we need to meet the demand?" Njoroge said.
He said drilling to reach the steam was a major problem in building geothermal power plants, but the company was planning to hire new rigs and buy some more.
Fuel and electricity are among the top drivers of double-digit inflation in the country, which has eased for the second consecutive month to 18.3 percent in January down from 19.72 percent in November.
Kenya has embarked on capital intensive alternative power generation projects, in a bid to reduce dependency on unreliable rain-fed hydroelectric dams and thermal power prone to erratic rainfall.
Njoroge said KenGen would not consider a rights issue because the market was bearish.
"Part of the problem of a right issue right now is that the market has been very bearish. We may not get the proper value of the stock. A bond of course goes to our balance sheet since it's a borrowing," he said.
(Writing by James Macharia; Editing by Helen Massy-Beresford)