KenGen sets in motion US$6.2bn contract drilling first well in Djibouti

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  • KenGen PLC has started drilling the first of three geothermal wells in Djibouti
  • The drilling of the first well is expected to take about two months to complete as KenGen seeks to export the expertise and experience earned in Olkaria, Naivasha
Kenya Electricity Generating Company (KenGen) PLC has started drilling the first of three geothermal wells in Djibouti.
The commencement sets in motion a KSh 700 million contract signed in February this year.
According to the company, the drilling of the first well is expected to take about two months to complete as KenGen seeks to export the expertise and experience earned in Olkaria, Naivasha where the company has successfully drilled about 320 geothermal wells.
KenGen Managing Director and CEO, Rebecca Miano termed the deal a historic moment for the firm.
“We are confident that our team on-site will deliver the project within the contracted time and on budget despite the prevailing circumstances brought about by COVID-19 and security situation in neighbouring Ethiopia.”
The CEO said KenGen had assigned a highly specialised multiskilled team to the project in the Horn of Africa country comprised of mechanical Engineers, drilling Engineers, project managers, drillers, cementing technicians and specialized welders among other key professionals in the geothermal development value chain.
With the drilling rig set up, KenGen is set to commence drilling of three geothermal wells for Djibouti Office of Geothermal Energy Development (ODDEG) over the next few months.
ODDEG Project Manager, Abdirasak Omar Moumin exuded confidence that KenGen would deliver the project as planned, adding that the Djiboutian team was looking forward to acquiring new knowledge from the Kenyan NSE-listed firm.
“We are happy with KenGen and learning a lot from the team on the ground. They have a long history and expertise in geothermal which makes them the best partners in implementing our geothermal dream,” said Moumin.
Ambitious strategy
The Djiboutian venture is part of KenGen’s ambitious diversification strategy, in which the company is seeking to acquire new revenue streams by offering commercial drilling services, geothermal consulting and other related services across Africa.
This is the third mega geothermal drilling contract that KenGen is implementing in Africa. In October 2019, the company secured a KSh 5.8 billion contract to drill 12 geothermal wells in Ethiopia.
The contract with Ethiopia’s independent power producer Tulu Moye Geothermal Operations (TMGO) PLC includes installing a water supply system and equipment.
In February 2019, KenGen won a contract to drill geothermal wells for the Ethiopian Electric Company (EEP) in Aluto-Langano, Ethiopia. The contract is for the implementation of drilling rigs and accessories as well as rig operation and maintenance for drilling geothermal wells. It is financed by the World Bank through a loan to the Ethiopian Government.

Last week, KenGen announced that it had completed drilling the deepest geothermal well in the Aluto-Langano project reaching a depth of 3,000 meters, surpassing a target of 2,750 meters.

KenGen is set to commence drilling of three geothermal wells for Djibouti Office of Geothermal Energy Development (ODDEG) over the next few months/ Kengen
Ethiopian project
The Exchange Africa reported that the milestone marked the second of eight geothermal wells KenGen has been contracted to drill for the state-owned electricity producer, Ethiopia Electric Power Company which was delivered successfully amid the COVID-19 pandemic.
“We are happy to see our teams deliver the same level of success in the Horn of Africa as we do back home in Olkaria where we have also drilled several geothermal wells to depths of 3,000 meters,” said Ag. Geothermal Development Director, Peketsa Mangi.
The KenGen team said it was optimistic that the project which is part of the company’s diversification strategy once completed will help catalyze economic development in the horn of Africa through the provision of renewable energy while at the same time increasing access to electricity.
Kenya is Africa’s number one geothermal energy producer and among the top 10 in the world with an installed capacity of 863MW with KenGen contributing about 713MW. The country has an estimated potential of 10,000MW along the Rift Valley.
Improved performance 
In the financial year ended 30th June 2021, the company reported a 7% Profit Before Tax increase from Ksh13.79 billion to Ksh14.76 billion.

Miano said the profit growth was achieved on the back of continued revenue growth underpinned by the company’s diversification strategy.

“In spite of the challenging times, KenGen remained strong recording a steady performance and demonstrating sound financial position which reaffirms the company’s promise and commitment to continual business growth and maximization of shareholder value,” the CEO said.

Read: KenGen’s Ethiopian project hits crucial milestone

Wanjiku Njuguna is a Kenyan-based business reporter with experience of more than eight years.

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