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KenGen to set up subsidiary to focus on additional revenue opportunities

KenGen management visiting GEG's plants, Olkaria, Kenya (source: Lydur Skulason)
Alexander Richter 14 Nov 2017

KenGen is founding a subsidiary to focus on diversifying its business from electricity generation to - among others - selling steam, geothermal consulting, heating and other related services.

Ahead of its Annual Shareholder meeting, Kenya Electricity Generation Company (KenGen) has announced diversification efforts.

The company plans to diversify from its core business of electricity generation to selling geothermal steam and commercial drilling services apart from its core business of electricity generation.

The company plans to set up a subsidiary that will oversee its non-core activities that are proving to be critical revenue streams. The subsidiary will also offer consultancy services for players in geothermal, mining as well as oil in Kenya and the region.

KenGen currently accounts for more than 75% of the country’s total installed capacity as a result of intense energy generation projects, notably geothermal, whose total installed capacity is 533.8MW (of a total of 676 MW for Kenya). The company however seeks to generate at least 2,500MW of geothermal power by 2025.

The cost of generation is pushing the company to diversify into other potentially new revenue streams.

KenGen chairman Joshua Choge says the company is setting up a fully owned subsidiary to undertake commercial ventures such as sale of steam which could be used in homes or green house farming.

Choge said the new venture will aid the company in delivering the targeted 10% return on investment and also reduce the cost of power.

KenGen is currently undertaking projects with total a capacity of 720MW to be completed by 2020 at a cost of Sh200 billion ($1.9 billion) as is targets to reduce reliance on thermal plants as well as provide stable energy during a slump in hydrology as a result of bad weather.

Source: KBC