4 March 2019

Ethiopia: Kengen and Chinese Companies On Ethiopian Geothermal Project

KenGen announced that its contract is for the implementation of drilling rigs and rig operation and maintenance for drilling geothermal wells at Aluto.

Kenya's electricity generating company KenGen has been awarded a contract in Ethiopia to explore and extract geothermal energy in the country. The company will work in partnership with a Chinese company.

Ethiopia's state-run power producer Ethiopian Electric Power (EEP) has been exploring on the use of geothermal energy in its Rift Valley region and now has awarded KenGen and Chinese oil engineering firm Kerui Group Co., Ltd.

KenGen announced that its contract is for the implementation of drilling rigs and rig operation and maintenance for drilling geothermal wells at Aluto. This is financed by the World Bank through a loan to the Ethiopian government for about 76.8 million U.S. dollars.

The International Development Association (IDA) of the World Bank provided financial assistance of about US $126m out of the total project cost of US $218m. IDA extended this support under its Geothermal Sector Development Project (GDSP).

Ethiopia boasts of an abundant geothermal potential with a potential of producing 10,000MW of geothermal energy and the country has been unable to match her neighbor, Kenya's installed geothermal power capacity of about 630MW with a similar potential.

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"The project will be implemented in two phases, phase I which is purchase of drilling rigs, and phase II which entails provision of drilling," Rebecca Miano, CEO of KenGen, said in the statement.

Abraham Belay, CEO of EEP, said that Ethiopia had tried to venture into geothermal development in efforts dating as far back as 1981 but was yet to make a commercial breakthrough.

"Currently we have some geothermal drilling rigs that are idle and now broken down and therefore the need to purchase new ones," said Belay.

Belay added that "we will be delighted to receive help to build the capacity of our people to be able to manage the equipment and run the power plants even after KenGen exit the sites."

Beyond local consumption, Ethiopia is also dealing with neighboring countries to export energy to them. Plans to export 1,000MW of electricity to Sudan and 60MW of energy to Djibouti are underway.

The two projects will help the country to boost the revenue it generates from the export of electric power.

Ethiopia

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