Geothermal cemented its top spot among the energy mix generated by Kenya’s largest power producer KenGen, raking in Sh9.3 billion ($90.3 million) in the first half-year to December 2019.
“Geothermal energy was the top company earner, bringing in Sh9.3 billion, up from Sh8.6 billion in the half-year period,” Kenya Electricity Generating Company (KenGen) said.
Overall, the State-owned firm booked a 98 percent net profit jump to Sh8.17 billion in the half-year period, propelled by tax savings tied to geothermal development alongside steam exploration contracts in Ethiopia. KenGen has identified geothermal, a clean renewable energy cash cow, as its strategic growth driver, bringing in core revenues and offering income diversification pathways.
“The (profit) growth is attributed to capital allowances arising from the completion of 165MW Olkaria V geothermal project which resulted in a tax credit of Sh1.89 billion, compared to a tax expense of Sh1.9 billion in the previous period,” KenGen managing director Rebecca Miano said.
The Olkaria V facility is based in Kenya’s Rift – Naivasha’s Olkaria steam fields.
Kenya’s tax regime allows for an investment tax deduction of up to 150 percent allowance on such capital expenditures as an incentive to spur large investments. It applies to projects valued in excess of $2million (Sh200 million) with those located outside Kenya’s three cities – Nairobi, Mombasa, and Kisumu – attracting a higher capital allowance of 150 percent and 100 percent for city-based investments.
Revenue earnings from hydropower, another energy source for KenGen, remained unchanged at Sh4.4 billion in the six-month trading window, followed distantly by wind and thermal sources.
The power producer, 70 percent owned by the government of Kenya and listed on the Nairobi Securities Exchange said that its other income grew 127 percent to Sh479 million, having clinched two geothermal drilling contracts in Ethiopia.
The firm is still constructing 83MW Olkaria I unit 6 geothermal plant, set for completion next year, which will push its total geothermal capacity beyond the current 612MW.
Officials recently announced that KenGen was eyeing geothermal infrastructure tenders in nine African countries that share the same geothermal belt along with the Rift Valley geology.
KenGen, which is handling two geothermal contracts in Ethiopia, is eyeing similar deals in Uganda, Tanzania, Djibouti, Rwanda, South Sudan, The Sudan, Zambia, and Comoros to boost revenues.