Kenya Electricity Generating Company (KenGen) has booked Sh1.78 billion revenue from drilling geothermal wells in Ethiopia, giving the firm a significant income diversification boost.
The earnings, posted in the financial year ended June 2021, is four times more than the Sh440.34 million that KenGen received last year. The revenue was from drilling services at Tulu Moye in Ethiopia and helped the firm’s revenue to rise by 4.1 per cent to Sh45.9 billion.
Net profit for the year, however, dropped 93.5 per cent to Sh1.2 billion on the back of higher taxation. The electricity producer had last year received a tax credit of Sh4.59 billion from Kenya Revenue Authority on the Olkaria V geothermal power plant project.
The firm set up KenGen Ethiopia in 2019 to facilitate the execution of a commercial consultancy and drilling service contract it signed with Tulu Moye Geothermal Operations. The latest earnings come amid the volatile situation in the Horn of Africa country, where a year-long civil war in Tigray continues to escalate.
KenGen was planning to start drilling services for the Aluto-Langano project—also in Ethiopia— but it is not clear if this will proceed, given the prevailing safety concerns. The firm said recently it was still assessing the security situation in the Tigray region before deciding whether to withdraw about 200 Kenyans drilling geothermal wells in the neighbouring country.
Ethiopia’s cabinet recently declared a nationwide state of emergency and cut communication in some regions in a move that has alarmed firms operating there. KenGen in 2019 won a Sh5.2 billion tender to drill geothermal wells in Ethiopia, its second contract in the landlocked country.
The Nairobi Securities Exchange-listed firm in February 2019 also won part of a Sh7.6 billion contract to supply geothermal drilling services to Ethiopian Electric Power.