Kenya Power has made a significant payment of Sh2 billion to United States-based geothermal energy producer Ormat Technologies, in a move aimed at easing long-standing financial tensions between the utility and its power suppliers.
The payment is part of broader efforts by the utility to reduce its mounting arrears to Independent Power Producers, amid growing scrutiny over delayed remittances and operational inefficiencies.
Ormat operates the Olkaria III geothermal plant in Naivasha, one of the largest privately-owned renewable energy facilities in Kenya. The plant contributes over 130 megawatts to the national grid and plays a critical role in supporting the country’s transition to sustainable power sources.
The payment by Kenya Power, although partial, represents progress in fulfilling obligations that had been accumulating and causing concern among investors in the energy sector.
The move follows increasing pressure on Kenya Power to meet its contractual obligations and support the financial health of energy suppliers, especially those investing in renewable energy.
With the energy sector heavily reliant on continuous investment in infrastructure and technology, consistent payment flows are seen as essential to maintaining momentum in green energy development.
The Sh2 billion disbursement is also timely, given the rising demand for electricity in both domestic and industrial markets. Power producers have been seeking assurances of payment to sustain operations and consider future expansion.
The payment to Ormat may help in restoring some investor confidence, especially as Kenya continues to brand itself as a regional hub for renewable energy.
Kenya Power, which has faced challenges related to liquidity, outdated infrastructure, and technical losses, is in the process of implementing reforms to improve financial sustainability.
These reforms include restructuring debt, reviewing power purchase agreements, and streamlining operations to reduce inefficiencies. By settling part of its outstanding obligations, the utility is attempting to stabilize its relationships with suppliers and avoid supply disruptions.
The payment to Ormat could set the stage for further settlements with other independent power producers, many of whom have issued warnings about service constraints due to overdue payments.
The development underscores the urgency for Kenya Power to resolve legacy issues, improve cash flow management, and realign itself with national goals on energy security and renewable development.
Written By Ian Maleve
