Kenya’s Geothermal Development Co. (GDC) will begin drilling for geothermal steam in Menengai this week in hopes of establishing new power plants.
The GDC has reportedly assembled two rigs that has landed onsite and been finalized for the first phase, totaling 400 MW, expected to be completed by 2014. The firm has invited prequalification bids from investors, and expects to drill 120 wells in the first phase of the project to contribute about 25% of Kenya’s installed power capacity.
GDC estimates that the project has the potential to produce about 1,250 MW of geothermal energy with potential investors being encouraged to receive guarantees from the World Bank’s risk insurance arm Multilateral Investment Guarantee Agency (MIGA).
Kenya’s guarantee status, or withdrawal, seems to be in question. On November 29, Alternative Energy Africa reported that the country requested that the German-owned development bank KfW help set up a €75-million fund to mitigate risks involved with geothermal exploration. However, the KfW fund was supposed to be geared toward the GDC’s Menengai development. The government announced on November 30 that it would connect energy investors with the World Bank and IMF in order to gain access to capital.
There is still some good news for potential financiers looking to take a chunk of the project. The African Trade Insurance Agency (ATI) said that it is more than prepared to help potential investors acquire credit guarantees. The organization’s CEO George Otieno said to local news sources that ATI was prepared to add more risk to its books and larger projects at gross exposure levels of $100 million for political risk insurance and $50 million for commercial risk insurance projects.
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