Catching Up With Eng. Johnson P. Ole Nchoe, the Outgoing Chief Executive of Geothermal Development Company

Last Updated 6 months ago by Kenya Engineer

This interview was conducted in May 2020 for Volume 3(20/21) of the Engineers’ Year 

Please introduce yourself briefly to our readers.

Okay. My name is Engineer Johnson P. Ole Nchoe, an electrical engineer by profession and also a registered member of the Engineering Board of Kenya and a professional member of the IEK. I have 34 years of experience in the energy sector. I’m glad to be giving this interview when I am retiring from GDC after serving the full term of my contract. With effect from 19th of April, the board of GDC has therefore appointed Engineer Jared Otieno as the incoming CEO and Managing Director of Geothermal Development Company.

So I would first like to thank the Government of Kenya and the board of Directors of GDC for their confidence in my leadership for the last four years and also for allowing me to be part of the process that selected my successor.

Something else I would also like to mention is that I am a business and thought leader in many forums and aspects around the country, particularly in renewable energy where I have horned my skills in geothermal energy and can now considered myself an expert in this region and all faces of development from exploration to project development and project financing.

I have an MBA and a BSC in Electrical from the University of Nairobi. I am also a family man.

In summary, what would you describe the mandate of the GDC to be?

GDC is a government owned entity tasked with development and management of geothermal resources in the country. Because of the nature of geothermal explorations, the whole spectrum is quite a risky and expensive affair. So despite the fact that you can do the studies an pinpoint locations of a geothermal source, it is still risky and expensive and therefore for this country to develop, the government made a decision to invest in the upfront risks of geothermal development in the country. GDC was then identified as the entity to take up those risks. This means that the government would finance exploration studies and also finance including of post-development partners and upfront drilling for exploration of the resources. The nature of the business is you can drill one well at a cost of for example Shs500 million and you need about twenty wells in a resource area for you to know whether that particular field is productive or not. It is therefore impossible for a private entity or an individual to spend all that money without knowing if the resource is there or not. So to attract private investors looking for opportunities in the country, I think that was a very good idea.

So our mandate is to explore for steam around the country and de-risk the geothermal fields.

Outline the success GDC has had in executing its mandate.

We have had a number of successes as GDC.

Firstly, the government invested in about 59 wells which generated roughly 400 megawatts in Olkaria and these wells were vested in GDC. As we speak, some of the power plants in Olkaria are actually running using steam from GDC, which is a model that the government decided to use. So we develop the steam and sell it to KenGen who will now convert it to electricity generation. I would say that that is a major success because GDC earns approximately Shs3 billion annually from the sale of that resource and that revenue is more or less guaranteed for another 20-25 years. Using that model, Kenyans are also able to enjoy cheaper electricity because of that model since the government has taken up the risk and therefore KenGen doesn’t have to recover that from the tariffs. As a result, the end user tariff to the common mwananchi is much lower, making Kenya a competitive destination for industries, hotels and other developments.

Onto another field called the Menengai geothermal project, the government has given GDC the license to develop that field and I would say a lot of progress has been made. We currently have approximately 200 megawatts of steam available for conversion. We have entered into contractual arrangements with independent power producers from the private sector to convert that steam into electricity.

This was a green field and GDC came in and did roads, water networks and also built major infrastructure like the steam gathering system which was completed during my tenure.
The government also asked the GDC to start developing another field called Baringo-Silale Geothermal prospect. It was a green field and we were to do massive work of building roads over an area of about 120 kilometers covering Korosi, Mpaka and Silale in Tiaty Constituency, Baringo County. Right now, we have put in infrastructure and communities living around there can now access clean water, something very important. We have also drilled the first well in Mpaka which has been successful and proven to have at least 3.5 megawatts. We are now into the third well which we hope will be complete by the end of this month.

The fact that we are also using Kenyans and not contractors to do all this is a major achievement because not many companies in this region have been able to develop the human capacity to be able to carry out such work. Most of them look for international contractors and pay them a lot of money. Of course our model has some challenges but we decided to refine it until we are able to do it as Kenyan engineers. The donor community and our development partners have actually shown confidence in our ability to carry out the work and have agreed to finance GDC as a contractor, which is the first kind of model that the development partners have agreed to adapt.

We have also been able to leverage and sell our technology to the region as we have trained countries like Djibouti, Ethiopia, Uganda, Tanzania and Comoros on geothermal energy.

What have been your specific functions at GDC and how have you aided the execution of its mandate?

Being a CEO and Managing Director, my role is that of leadership. During my tenure, I have executed my mandate as delegated by the board of directors in a professional manner and to the best of my ability.

One of my major achievements is that in terms of governance, we have not had any corruption issues during my tenure. Corruption is a major problem in our country and around the world but we have been able to answer any queries that have arisen and protected the integrity of the organization.

We also have a staff complement of a thousand employees and major equipment that we have been able to build over time. We have an asset base of Shs100 billion as I leave, which I have grown from Shs60 billion. So that translates to an addition of Shs10 billion to the asset base of the company each year during my tenure.

I have also been able to restructure the balance sheet of the company into a profit-making organization and we can today say that GDC is a healthy organization with the capacity to attract financing and fulfill its mandate to the people of Kenya.

Could you highlight some of the projects you have overseen to completion and those that you leave ongoing. What are their expected impact on Kenya’s Energy Sector?

I did mention that through the steam that we produce in OlKaria, the end-user tariff reduced drastically to eight US cents per kilowatt hour, which is the lowest we are able to offer Kenyans at the moment. During my tenure, those wells were vested from government to GDC and that uplifted our balance sheet.

Secondly, as I mentioned, the Menengai Geothermal Project is now mature compared to how it was when I took over as CEO. This has the potential of further reducing the end-user tariff from eight US cents per kilowatt hour to seven US cents per kilowatt hour which will be the lowest.

Another project that was started during my tenure is the Baringo-Silale Geothermal Project. This project has a huge potential of producing power, not just for Kenya but the entire East African region. It is being funded through the government by a German development bank called KFW, the Africa Union and other development partners. This was made possible through creating a conducive environment that attracts the development community into Kenya and specifically GDC. So in that three-year period, we have been able to drill three wells, build road networks and more importantly a water pipeline where we pump water from Lake Baringo for a distance of about 120 kilometers. This water is used for drilling by GDC and we have also built twenty water community points because that area is one of the driest in this country. There were many conflicts among the communities living there as they fought over pasture, land rights and water. Through collaboration with the provincial administration, we have therefore been able to improve the social and economic standards of living for the people of Baringo County. Those communities now live in peace largely because of the water provided by GDC and that has been one of the huge success factors for this project.

What are the major technologies and equipment GDC has employed to aid development of geothermal energy?

That is a very important question because one of our competitive advantages as GDC is we might not be well understood due to the nature of our role.

The government has invested heavily in equipment and technology within GDC. As I mentioned, through the government, we have seven deep-drilling rigs which are very expensive. These are being managed by our own staff and I’d say that no other company in Africa has that kind of equipment and technology. This is a great achievement and the rigs can be maintained for even thirty years. With a bit of modification, they can even drill for oil.

What challenges have you as the CEO and GDC as a company been facing in the execution of this mandate?

Of course when you talk about risks, it has two elements of either succeeding or failing. We have definitely had some pitfalls especially in terms of contractors failing to do their work, which forced us to cancel some of their contracts, litigation and other measures. In my tenure, I generally had to pick the broom and sweep the house so I took a big one and any contractor who was being a bit wishy-washy, I did not hesitate to invoke that termination clause in the contract. This was a major challenge as it is not easy when contracts are terminated; you find yourself in court. I however believe that everything we did was for the benefit of the organization and for the country as a whole.

The fact that we are funded through the national assembly also made financing a challenge. We therefore had to look for alternative ways by going to the donor community as these are capital intensive projects.

What are the expected growth areas for geothermal development in Kenya?

What we call the Eastern Rift Valley has been identified geoscientists as having a geothermal capacity of up to 10,000 megawatts, within Kenya alone. Right now, we have only been able to develop about 700 megawatts so we have a long way to go in tapping into what I call ‘the new gold’. The world is moving away from fossil fuels like diesel and petrol many countries will use electricity for virtually everything in the future.

As GDC, our strategic plan is to expand our steam development capacity in Menengai Geothermal Project to 465 megawatts. We also want to increase the same in Baringo from three megawatts to three hundred.

We are also targeting and focusing on the Suswa prospect as a geothermal area because it has been identified as one of the potential areas.

What specific roles do Engineers play at GDC?

I think 80% of the jobs at GDC are run by engineers. All departments like the drilling department, explorations department and direct-use departments are headed by experts in engineering as they have to understand the technology.

In Summary, what is the current status of the Kenya Energy Sector?

I think it is solid. Our supply is higher than the demand, which means that there is no rationing. It is actually going to be better because the tariffs will come down as we invest rapidly and expand the transmission grid to places like Western Kenya and Mombasa.
Therefore, breakdowns and blackouts are becoming fewer as time goes by and we see a brighter future prospect with Kenyans enjoying better quality in life and our industries producing more goods and job opportunities. Looking at our neighbors, there is no country that can match the capacity of Kenya in terms of electricity.

Could you give us your professional opinion on the accreditation of degrees in Kenya?

My appeal to the Engineers Board of Kenya is for the body to be more proactive because when I look back probably thirty-five years ago when I graduated from university with my Bachelors degree, the engineering profession is rapidly changing. The brick and mortar jobs might not disappear, but you are not going to need so many people to do that job in the near future. I have visited several powerplants, especially hydro, in many parts of the world and some of them are remotely managed, which means that there are no jobs. You only need one or two people to manage it remotely and so once the contractor finishes his work, what will engineers do yet the opportunities are so limited?

In what ways can the Commission of University work with the Engineers Board of Kenya to ensure convenience in the training and accreditation of engineers?

Technology is taking over and so in my view, the Engineers Board of Kenya should review the curriculum by working very closely with universities to expand and define who an engineer is. For example, software jobs are becoming more rewarding and their opportunities doubling but when you look at their traditional definition, we had their traditional engineering courses; either electrical, civil or mechanical engineering. Our curriculum however does not have a course that produces software engineers, except for JKUAT who tried. So when these young people finish college, they find it hard registering as an engineer.

This is not a good thing for Kenya so in my view, we should be able to expand and be able to capture these talents because most of these learners are A students who have passion in fields such as ICT or telecommunications and might therefore not necessarily fit into what we call traditional courses like mechanical, civil or electrical engineering. I think this is a challenge that the board is looking into.

There is also a major problem in the universities. They are splitting what we used to do in college and coming up with degree courses that have very funny names. So, when our young people graduate, you cannot figure out what he exactly did in the university. Universities should not start engineering courses without getting clearance from the Engineering Board of Kenya. That is the body mandated with looking at the quality and accreditation of engineering courses being offered by our universities.

What career advancement opportunities does GDC offer engineers it employs?

We offer very good career development opportunities. We also get a lot of scholarships from countries like Iceland and Japan. Most engineers like it when they come to GDC because since our universities don’t offer geothermal technology as a course on its own, they are able to train in partnership with global bodies and thereafter get accreditation for their work.

What benefits do Kenyan companies stand to gain in fostering partnerships with local learning institutions?

That is what we are planning on as GDC; to identify companies that can offer training opportunities for our engineers. We are actually thinking a Geothermal Centre of Excellence where we can partner with several other institutions to offer the same technological training to African countries.

What do you think are some of the opportunities and expected growth areas for engineers especially those in the energy sector?

The government can develop through the Geothermal Centre of Excellence I said we are thinking about. This will also be a good opportunity because they can train other Kenyans and even other African countries on geothermal technology. The good thing with geothermal training is that it can also be applied in the oil and gas sector.

So young people will have a lot of opportunities, not only in Kenya but the whole of Africa and globally too.

What role can Kenyan engineers play to help fight the Corona Virus pandemic?

As GDC, we are first of all educating our staff on more of what the virus is all about. I think many people have seen an educational video I personally produced that was shared widely, not only amongst GDC staff but actually around the globe. I was surprised to receive calls from as far as Iceland about it.

We may not have much but I think disseminating what policies, instructions and advice the government is giving out is the most important thing. We have around 1050 employees, who also have families and so constant education and information on the virus is the best way to keep them safe. We have also tried assisting communities around us like in Baringo by providing soap and water to wash their hands.

What do you think are the challenges faced by engineering professionals and the engineering profession in Kenya and East Africa?

In my view, I would say that there are two major challenges, which are related.
One is we have many unemployed engineers but most of them are looking for ‘mainstream jobs’ mainly from the government, parastatal or private sector. So when the economy shrinks due to a challenge like the corona virus, even the engineers are affected. Right now, there is no permanent and non-permanent jobs. Jobs are becoming more agile and versatile, and therefore the engineers should also adapt with the changes. They need to develop their skills to always be ahead of the competition.

The issue of engineers not knowing what exactly to do with the training they have received is the other major challenge.

What are your immediate and future plans following your exit from GDC?

My immediate plan is to spend more time with my wife. I have never really had a break especially after working hard for such a long time. So for now, I am just taking it easy and if I can get a chance to go for a short holiday, I would gladly do that.

The long-term plan is to offer my immense experience as a leader and expert in renewable energy both to Kenya, the entire region and the world. I am a world citizen and the opportunities are so many. I want to help Kenya make a difference and bring down the cost of power so where my skills are needed, I will be glad to serve.