National Assembly is probing United States energy firm Ormat Technologies’s deals with the debt ridden electricity power distributor, Kenya Power.
According to Ormat in regulatory filings with the US Securities Exchange Commission (SEC), Kenyan Member of Parliaments have asked for details of their operations at Olkaria and agreements with the Kenya Power.
“Ormat received a letter from the Kenya National Assembly with a request to respond to various questions and to provide materials regarding our Olkaria complex operations and its PPA. Ormat is engaged in conversations with the Kenya National Assembly to respond to their requests,” the firm said in the fillings.
Ormat said the letter was sent in July after President Uhuru Kenyatta launched a task force chaired by investment banker John Ngumi to review the expensive Power Purchase Agreements (PPAs) entered into between various Independent Power Producers (IPPs) and Kenya Power, including Ormat’s for the Olkaria complex.
Additionally, Ormat said even though it had production disruptions at the Olkaria complex, shareholder interest was protected by the Kenya Power agreements from variation in electricity generation due to fixed payments.
“The company continued to experience certain curtailments in the first and second quarters of 2021 by KPLC in the Olkaria complex. The impact of the curtailments is limited as the structure of the PPA secures the vast majority of the company’s revenues with fixed capacity payments unrelated to the electricity actually generated,” the firm said.
Further, the firm said that although Kenya Power was 77 days late in making payments, it was confident that the Kenyan firm will clear the receivable since the agreements also contain a support letter from the government that covers certain cases of Kenya Power non-payment (such as were caused by government actions and or political events).
It stated that he company has historically been able to collect on substantially all of its receivable balances.
As of June 30, 2021, the amount overdue from Kenya Power was $43.5 million (Sh4.7 billion) of which $13.2 million (Sh1.4 billion) was paid during July 2021.
Since 2000, Ormat has developed and expanded the Olkaria III complex in phases and increased its generating capacity from 13 MW to 139 MW by 2016.
The scope of the project included drilling of new wells, adding a new Ormat Energy Converter unit, and optimizing other existing units.