Kenya Electricity Generating Company (KenGen) risks losing control of strategic geothermal wells and infrastructure at Olkaria after a licensing error left parts of the field outside its legally designated area.
The latest Auditor-General report has revealed that the Ministry of Energy and Petroleum mis-recorded the coordinates on the geothermal licence it issued to KenGen on September 19, 2008, eight years after the company applied for it on February 7, 2000.
The errors altered the boundaries of the licensed area, turning a rectangular field into a triangular shape. The State then later allocated part of the original area to another geothermal developer.
The Ministry acknowledged the error in 2017 but has not corrected it as at the time of the audit in August 2026 despite reminders from KenGen. This has left the company exposed to uncertainty over its rights to exploit the geothermal resources and protect its investments.
‘Despite several requests to the Ministry by [KenGen] management seeking rectification of the coordinates error and restoration of the excised licence area, no corrective action had been undertaken by the Ministry as at the time of audit,’ said the audit.
‘In the circumstances, the company is exposed to the risk of loss of rights over strategic and investments made on geothermal infrastructure.’
The blunder arose from an error in the coordinates defining the four corners of the licensed area, marked A, B, C and D. One of the coordinates was recorded as 21,000 instead of 192,000, distorting the boundaries of the 204-square-kilometre licence.
The report notes the error distorted the boundaries of the licensed area, excluding parts of the geothermal domes and leaving some of KenGen’s wells and steam infrastructure outside its licensed territory.
The Auditor-General office has revealed that the issue was compounded in 2018 when part of the affected area was excised and allocated to another geothermal developer. This has potentially complicated KenGen’s operations in a field where it has invested heavily in drilling wells and developing power-generation infrastructure.
‘Part of the affected licenced area was excised from the company’s licence in 2018, and allocated to another geothermal developer. As a result, geothermal wells, steam infrastructure and other assets developed by the company are outside the company’s licensed area, thereby restricting control and access to strategic geothermal resources and already developed infrastructure,’ says the audit.
Olkaria is central to KenGen’s business and the country’s energy security. The company operates several geothermal power stations and wellhead plants in the area, with its wider Olkaria portfolio accounting for 88.2 percent or 663.7 gigawatt hours (GWh) of the 752.25 GWh installed capacity of geothermal sources as at end of June 2026.
The scale of the operations raises the stakes in resolving the licensing dispute, especially if the affected boundaries overlap with productive wells, steam-gathering systems or other infrastructure required to sustain electricity generation.
However, the precise value of the assets located within the disputed area, and the amount of generating capacity directly affected by the error, could not be established from the available information.
The Business Daily reached out to the company for a comment on the value of assets excluded from the licensed territory due to the Ministry’s error but had not responded by the time of going to press.