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Steam sales, drilling, spa and an industrial park core of KenGen diversification strategy

Olkaria Geothermal Spa, Kenya (source: HapaKenya)
Alexander Richter 29 Nov 2017

Geothermal steam sales, consultancy, drilling, geothermal spa and a planned industrial park are the core elements of a planned new subsidiary of KenGen to help it diversify its revenue streams.

We have reported before on the plans by Kenya’s Electricity Generating Company (KenGen) to diversify its revenue streams under a new – to be founded – Service Company.

Now details emerge on the planned businesses to be part of that subsidiary.

In the past, KenGen has sold geothermal steam to flower firms in Naivasha, has drilled geothermal wells for other firms and is running a geothermal spa. Furthermore the company has planned an industrial park, where companies are to be attracted that could utilise geothermal power and heating provided by the nearby geothermal power pants of KenGen.

But there are also additional revenue streams that the company is looking into, as confirmed by KenGen’s new Chief Executive Rebecca Miano. With this new subsidiary, KenGen would like to diversify its revenue streams, while enabling the company to focus on its core energy generation business.

“KenGen would like to diversify revenue streams. So far, there are few things that we have been doing alongside our generation business, especially consultancy in the area of geothermal. We have also been getting proposals from companies interested in drilling and would like KenGen to offer them commercial drilling services,” said Ms Miano.

“We also have a spa that has an element of tourism and other services. The subsidiary will consolidate all these non-generation activities into one so that they are more structured and we are also able to have KenGen concentrate on the generation business.” The new revenue streams are becoming critical in growing the firm’s revenues. Over the financial year to June, KenGen earned Sh5.2 billion from the sale of geothermal steam to flower firms neighbouring its fields in Olkaria, although this was a decline from the Sh6.8 billion the company raked in the previous year.

Revenue from the sale of electricity is, however, still the bread and butter for the company and stood at Sh29.3 billion in the year to June this year.

The new company would have its own management, with an oversight by KenGen but a lean structure, so the company.

Source: Standard, Kenya