Kenya Electricity Generating Company (KenGen) is banking on non-energy generation revenue sources to capture a bigger slice of the Eastern Africa’s lucrative clean energy sector development deals.
The Nairobi Securities Exchange (NSE)- listed firm which produces more than 70 per cent of the power consumed in the country seeks to increase focus, especially, on consultancies, operations, maintenance services and training.
However, the move to capture a bigger slice of the pie has set the firm on a warpath with monied international firms eyeing the region’s energy solutions market, including deals being fronted by the African Union Commission’s Geothermal Risk Mitigation Facility programme (GRMF).
Players here include China’s Great Wall Drilling Company, Grey Wolf Drilling International of Kuwait, Iceland Drilling Company, and United Kingdom’s Marriot Drilling.
Also in the race are Houston, US- headquartered Schlumberger and Parker Drilling as well as Kenya’s Tsavo Oilfields. The strategies of the firm, 70 per cent owned by the government and 30 per cent by private investors, saw it bag a $6.45 million (Sh705.6 million) deal last week to drill three geothermal wells in Djibouti.
KenGen’s foray into the regional geothermal well drilling services are so far bearing fruits, having been awarded contracts for such services in Ethiopia earlier on.
The firm won two contracts worth Sh7.6 billion to supply drilling services to Ethiopia Electric Power, and another Sh5.2 billion from Tulu Moye Geothermal Operations Plc, the latter to drill wells and offer geoscientific survey.
KenGen is also in contention for a third contract in Ethiopia, having been shortlisted to develop the 500 MW Corbetti Geothermal wells in Corbetti Caldera fields.
Facing headwinds At a time when its main client Kenya Power is facing headwinds, Rebecca Miano, KenGen’s managing director and CEO says these milestones are driven by a diversification strategy, based on the company’s Good-to-Great (G2G) strategy which started in 2007.
“Going forward , we will use our three-pronged business model to create more value in our operations,” she said during a media briefing last year.
These, Miano added will enhance the firm’s capacity expansion as well as diversification goals which are geared towards strengthening its financial muscle and building a sustainable business.
These three approaches include: KenGen A – which is the traditional KenGen legal parent driving the generation business whose growth continues to be financed on the balance sheet and KenGen B – the Public-Private Partnership (PPP) model with ring-fenced risks and cash flows that will fast-track our installed capacity expansion through joint ventures with local and international partners.
The other approach is KenGen C – a 100 per cent owned subsidiary (named KESEL), that will drive the company’s consultancy service business across the region.