Relief as troubled Sh8b KenGen project kicks off

Last Updated 13 years ago by Kenya Engineer

The troubled Sh8 billion wellhead project in Olkaria has been rescued after the pilot project finally turned around to deliver power, clearing the way for the construction of 14 other wells in Naivasha.

The success of the portable wellhead generator now promises to give the management of the Kenya Electricity Generating Company (KenGen) some relief after the pilot phase that was rocked by controversy over the tendering of the project flopped.

But it is the Norwegian company awarded the contract, Green Energy Group (GEG) that will sleep easiest after doubts emerged over its ability to deliver the mega project, given that it had never been tried elsewhere in the world.

It is understood that GEG was given a second chance to deliver a replacement unit after the first acceptance test was unsuccessful at its own cost, a unit that has now delivered the desired results for the test.

KenGen had already paid 50 per cent, Sh371 million to GEG for the first acceptance test, and had come under pressure to explain why it went ahead to award the Norwegian firm a bigger tender to supply and install 14 additional wellheads despite the fact that the contractor delivered defective machines for the trials.

This forced the power distributor to give the Norwegian company until mid this year to deliver the project or refund the money. “The contractor, who was making the turbines made some miscalculations in the workshop on the machining. We removed the faulty turbine and kept it aside and the contractor brought new turbines, which are now working,” said Mr Geoffrey Muchemi, the Geothermal Development Manager at the Olkaria geothermal project in Naivasha.

The total cost of the trial was about Sh780 million. The contract to supply a wellhead for one of the geothermal wells in Olkaria, Nakuru County, was finalised in December 2009.

KenGen has also viciously fought claims that there was no competitive bidding in the procurement of the contract for the first wellhead generator. Investigations show that KenGen left the pilot project to the Norwegian firm, which missed several inspections of the project, partly causing the initial acceptance test that was unsuccessful.

“At the time, we had thought the contractor was supervising the workshop and later on we found that there were some missed inspections. Under their cost, they accepted the loss. But on our part, we have since learnt our lesson and we are now doing very serious factory inspections at every stage,” Mr. Muchemi said.

However, what remains unclear is the production potential of the plant. Though the Norwegian firm constructing the plant says on its website it is a 5 megawatt geothermal power plant, a notice at the plant in Naivasha contradicts this figure saying it has a 6MW plant.

The pilot is currently generating 3.2MW of power only against the expected 6MW. The managers on the ground noted that though its capacity is 6MW, plants don’t always operate at their maximum potential due to various factors, including demand.

The power generator has already started constructing the first of the 14 remaining plants in the main project after what it terms as satisfactory results of the pilot project.

“We expect to complete the 14 other projects by the end of 2014. Should we have any slug, then it may spill into early 2015 but our target is to complete them next year,” Muchemi said.

The firm said each of the wellheads would cost about $6.5 million to construct, less the drilling cost. It plans to construct two units in every two months.

 “The payback time of each of these wellheads is between four to seven years,” he said, adding that KenGen already had all the funding it needed for this project expected to cost $93 million. This translates to about Sh8.1 billion at the current foreign exchange rates.

The money for this project came from the Sh15 billion public infrastructure bond it floated in 2009. “The advantage of the wellhead is because of the size, it makes geothermal development more flexible,” Mr Muchemi said.

KenGen say it has a contract obligation with the supplier to be able to move the plants within one month, but this is yet to be tested because no plant has been moved yet.According to the plan, the new wellheads are supposed to be moved from one well to another, helping to inject new energy into the national grid immediately after it is drilled.

Source:Standard Digital