21 November 2012

Kenya: GDC Seeks Insurance for Each Well Drilled

KENYA has applied for a risk mitigation insurance with German development based bank KfW for its upcoming geothermal projects to cushion itself in case of less than expected energy output.

Under the arrangement, the insurance by the financial lender refunds an exploiting firm 80 per cent of its costs if the power obtained from drilling from an area is less than 5MW.

Geothermal Development Corporation's general manager Peter Omenda said yesterday that the insurance by KfW will help increase geothermal power exploitation in the country and continent in general by giving investors a fall back plan.

"When you get to new drilling areas you don't know what to expect...most of the money spent for geothermal projects in such areas is just risk money for setting up water facilities, opening up roads and others just to support the project," said Omenda.

"It can be a very expensive affair and yet it is not a guarantee that what your studies showed as energy potential of an area is what you will get."

This insurance facility, he said, has been there since 2008 but will be commissioned this year to boost exploitation of geothermal generated power in the continent.

GDC will make use of this cover for its upcoming drilling projects in Suswa and Silali. Omenda was speaking at a press briefing yesterday ahead of the African Rift Geothermal Conference that opens today in UN offices at Gigiri.

The event is themed: Geothermal, solution to Africa's energy needs. It is held after every two years to boost development plans for geothermal power exploitation.

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