KENGEN’S NEW PLAN

KENGEN’S NEW PLAN

kengen-m-d-albert-mugoright-with-finance-director-john-mudany

 

The main income for KenGen is currently on earnings from sale of geothermal steam.

Their ranking for the accounting year ended June was 6.8Billion.They are now looking on how they can boost their revenue from 23% of total revenue to 30% said KenGen Finance Director John Mudany. With this plan they are looking to further diversify its non electricity revenue by offering consultancy services, increasing steam sales and leasing out drill equipment.

“Last year we made close to Sh1.5 billion from just drilling. We expect to see revenues increasing from this source,” said the KenGen chief executive Albert Mugo at an investors briefing Wednesday.

“We are concentrating a lot on diversification and definitely on the days to come- from consultancies, from drilling and also from steam- we’ll see more money coming in.”

The power company sell its geothermal steam to neighbouring flower farms in Naivasha to run their small power plants. They are also eyeing to industries planned to be set up in the planned Naivasha Industrial Park to sell steam to them once established.

The company has three drilling rigs which they have hired out to Akiira Geothermal Ltd. They are seeking more opportunities for drilling services.

Mr Mugo said they are seeking more opportunities for consultancy .These involve feasibility studies conducted before actual drilling of the geothermal wells. KenGen conducts the studies to determine the steam quantity likely to be yielded.

“All these studies that you need before you put your money down, we have that skill and that is what we are selling,” said Mr Mudany.

Studies by the Ministry of Energy show , Kenya has the potential to produce about 10,000 megawatts of geothermal power from the Rift Valley basin,

 

Less than 10 per cent of this has currently been tapped to produce power highlighting the potential for KenGen to earn revenues from these specialised services.

The country is banking on the cheap geothermal power to boost its total installed capacity, with the government placing it at the centre of its ambitious power generation plans.

The diversification of revenue by KenGen is linked to the increasing competition in electricity sales as more independent power producers enter the market.

KenGen currently supplies 80 per cent of the power in the grid but upcoming producers like the Lake Turkana Wind Power Project that will inject 300 MW next year are expected to challenge this dominance.The NSE-listed company is working to build more generating stations to keep up with the emerging IPPs.

It has lined up seven projects in the next four years that will add 725MW by 2020. It cited hefty capital requirement for the first two projects as the reason behind the failure to pay dividends this year.

Mr Mudany said that the company expects to start the 140MW Olkaria IV by December. The total cost for the project is US$623 million (Sh62.3 billion), inclusive of drilling which has already been done.

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