Djibouti’s State-owned geothermal agency has offered to pay Kenya Electricity Generating Company (KenGen) about Sh129 million ($1 million) as the first instalment towards a five-year-old debt arising from a geothermal drilling contract.
KenGen says in the latest annual report that the Djibouti Office of Geothermal Energy Development (ODDEG) has proposed an initial payment of $1 million against outstanding invoices of $2.13 million (Sh276.03 million), offering a potential breakthrough in the power producer’s debt recovery efforts.
‘The company continued to engage ODDEG to recover outstanding invoices amounting to $2.13 million, and ODDEG has acknowledged the debt and has proposed an initial payment of $1 million as the first instalment towards settlement,’ said KenGen.
The debt dates back to a 2021 contract valued at $6.45 million, or about Sh710 million at the time, under which KenGen was contracted to drill three geothermal wells at the Galla Le Koma field in Djibouti.
The proposed payment would form a partial recovery from the overseas contract. The Office of the Auditor General has previously flagged the contract, saying it had weak contractual terms that did not ‘sufficiently safeguard timely payment.’
The Djibouti project formed part of the company’s push to grow its geothermal drilling capabilities beyond Kenya. KenGen has built technical expertise in geothermal exploration, well drilling and consultancy through decades of developing the Olkaria fields.
Over time, it has turned this experience into a regional business by providing drilling, geoscientific studies and technical services to other countries developing geothermal power. Its international projects have included drilling 10 wells during the first phase of Ethiopia’s Aluto geothermal project, alongside work in Djibouti.
The firm has also undertaken geoscientific consultancy in Eswatini and drilling in Tanzania, extending its reach into areas seeking to tap underground heat for electricity generation.
KenGen’s revenue from diversification sources, which includes drilling and consultancy services, fell to Sh122.1 million in the financial year ended June 2026, from Sh263.6 million in 2025 and Sh759.2 million in 2024.
The firm’s annual report notes that drilling in Ethiopia and Djibouti have concluded, although the company continues to pursue further regional opportunities.
‘The company is also pursuing opportunities in the region and beyond, with ongoing negotiations for drilling and geoscientific works in Djibouti and Zambia,’ said the firm.
In Kenya, KenGen runs several geothermal stations, with Olkaria I power station being the first geothermal power plant in Africa.
The first unit of the Olkaria plant was commissioned in June 1981, with the second and third units coming in November 1982 and March 1985, respectively.
The company’s main business remains electricity generation, with total revenue rising 6.4 percent to Sh59.7 billion in the year ended June 2026, from Sh56.1 billion a year earlier.
Its overseas drilling and consultancy work is intended to diversify income while utilising its technical capabilities in a continent that has untapped geothermal potential.