27 th November, 2019 Request for Qualifications Stage PRESENTATION - - PowerPoint PPT Presentation

Olkaria PPP Investor Conference 140MW PPP Geothermal Project 27th November, 2019

Request for Qualifications Stage

PRESENTATION BY: REBECCA MAINO MANAGING DIRECTOR & CEO, KenGen

Contents

Larger Headline Goes Here

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1. 1. Sector In Institutional Framework 2. 2. In Introductio ion to KenGen 3. 3. Project Overv rview 4. 4. Procurement process 5. 5. Sch chedule

KENYA POWER SECTOR INSTITUTIONAL FRAMEWORK

TRANSMISSION RE REGULATION PO POLIC ICY / GU GUIDANCE DIS DISTRIBUTION

IPPs

GE GENERATION / EX EXPL PLORATION National Installed Capacity: 2,898MW ~62%

installed share

4

NATIONAL INSTALLED CAPACITY & GENERATION MIX

28.51% Hydro 29.29% Geo 27.88% Thermal 0.97% Cogentn 1.76% Solar 11.60% Wind

Instal alled led Capacity acity (MW) ) October

• ber 2019

Hydro 32.55% Geothermal 43.79% Thermal 11.29% Cogeneration 0.00% Solar 0.52% Wind 10.37% Imports 1.48%

Generat eration ion Mix 2018/19

Hydro Geothermal Thermal Cogeneration Solar Wind Total 826.2MW 848.7MW 808.1MW 28.0MW 50.9MW 336.1MW 2,898.0

Includ udes es Off-grids ids

5

INSTALLED CAPACITY – KEY PLAYERS KenGen en 62% 62% RE REREC REC 2% 2% IPPs 36% 36%

KenGen REREC IPPS Total-MW 1795.6MW 50.0MW 1052.4MW 2898.0MW

6

KenGen: Overview- who we are

OUR STRENGTH:

• We are now in our 65th Anniversary
• 70% Govt. (30% public: 6.594 bln shares issued)
• Our Motto: ENERGY FOR THE NATION.

1,795 MW (~75% sales market share) Mission: …to efficiently generate competitively priced

electric energy…

Vision: … to be the market leader in the provision of

reliable, safe, quality and competitively priced electric energy…

Values: … T

eam Spirit; Integrity; Professionalism & Safety

Skilled Staff: ~2,500

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KenGen: Overview- Our Installed Capacity

50% 46% 33% 39% 15% 14%

690MW 818MW

100%

2018 Wind 2019 Hydro 2% 1% Geothermal Diesel & Gas

KenGen Energy Mix

with Olkaria V new addition 253MW 25.5MW

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2014

1,245 1,187 1,213 1,630 1,617 1,631

2018

1,009

2013 2019 2010

1,631

2011 2012 2015 2016 2017

1,796 1,187

2009

1,409

+165.4 MW expected later this year (Olkaria V)

MW

KenGen: Overview-Our Consistent growth

9

KenGen: Overview-our Asset Base-Kes Billion 103 151 161 163 189 250 343 367 377 379

2014 2010 2009 2013 2016 2018 2011 2012 2015 2017

+266%

16%

Balance Sheet as at 31st Dec. 2018

10

GOOD-TO-GREAT JOURNEY

Good Company Great Company Time 10 years+ (> 2025) Horizon III Explore expansion

• pportunities
• Drive expansion

beyond Kenya

• Establish a strong

African footprint

• Leader in technology

and innovation Horizon I 2008-12 Horizon II 2016-25 Stabilise power situation in Kenya

• Delivered 325+MW
• Increased RoE to

12.5%

• Drilled 150+

geothermal wells Revamped plan Create sustainable power growth in Kenya

• Deliver 2,500MW
• Create value for our

shareholders

• Lower tariffs
• Diversify business
• Build capabilities

for our future Base Plan 2013-15 Delivered 375+MW

~900MW 1631M W Scaling up!

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KenGen: ISO CERTIFIED COMPANY

Good-to- Great

PIBO / Rights Issue Pilot Wellheads Innovative Finance Geothermal Spa 280MW plant Energy Park (planned)

83MW of early generation; prudent geothermal reservoir management and sustainability SPV / PPP; profit retention; reducing reliance on Government support Big Four agenda driver; competitively priced electricity, steam, water, etc. to industries / manufacturers 2 conventional plants each with twin 70MW units; largest single geothermal project globally Largest in Africa; prime tourist attraction

• KShs. 25B Public

Infrastructure Bond (2009);

• KShs. 26B Rights Issue (2016)

GOOD-TO-GREAT JOURNEY

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DRILLING PERFORMANCE- WE DO THIS VERY WELL

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GEOTHERMAL – ……AND DEVELOPMENT AND OPERATION TOO! OUR GEOTHERMAL GROWTH PATH

14

GEOTHERMAL – ……WE KEEP IMPROVING OUR GEOTHERMAL EXPERTISE

CENTRE OF EXCELLENCE POWER PLANT OPERATIONS & MAINTENANCE SERVICES WELL TESTING SERVICES DEEP DRILLING SERVICES GEOTECHNICAL SERVICES

• Ethiopia, •

Djibouti

• Rwanda
• Sudan

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3653 1948 1868 1347 1005 951 944 849 755 549 500 1000 1500 2000 2500 3000 3500 4000 United States Indonesia Philiphines Turkey New zealand Mexico Italy Kenya Iceland Japan

GEOTHERMAL – AND WE ARE ON THE GLOBAL MAP

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THE OLKARIA PPP PROJECT

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GEOTHERMAL POTENTIAL - KENYA

Oo 2oS 38oE 36oE North Island

• L. Turkana

Central Island South Island Barrier Volcano Emuruangogolak Silale Paka

K K K K K K E E E E E EN N N N N N Y Y Y Y Y YA A A A A A

Nyambeni Mt. Kenya Mozambique metamorphic belt

Longonot

Nairobi

Olorgesaille Shombole

Chyulu

Ol'Doinyo Lengai 50 100 150 Kilometers

Basal t-Trachy te-Rhyol ite cent ers Neph elinit ic cent ers Alka line ce nters Lak es Rift F aults

Kilimanjaro TA NZAN IA Cenozoic volcanics Mesozo ic sediments

Suswa Olkaria Eburru Menengai Ol'Esakut

UGANDA H u r i

Korosi

Kisumu ETHIO PIA

4oN 38oE

• Mt. Elgon
• L. Magadi

Homa Hills

Geot hermal Prospects Geoth ermal Fiel ds

• L. Naiv

asha

Arus-Bogoria

• L. Baringo

Namarunu

Rift Region Potential (MW)Central Rift  Menengai 1,600MW  Eburru 250MW  Arus Bogoria 400MW 2,250MW South Rift  Olkaria 2,000MW  Longonot 750MW  Suswa 600MW  Lake Magadi 100MW 3,450MW North Rift  Lake Baringo 200MW  Korosi 450MW  Paka 500MW  Silali 1,200MW  Emuruangogolak 650MW  Namarunu 400MW  Barrier 450MW 3,850MW Nyanza Homa hills 100MW Akira 350MW 450MW

Total Potential 10,000MW

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OLKARIA PPP PROJECT OVERVIEW

Olkaria Geothermal Field

• The Olkaria geothermal field is in Naivasha,

approximately 120 km northwest of Nairobi

• The entire Olkaria volcanic field covers an area of

approximately 240 km2 and is situated at an elevation ranging between 1,900 and 2,200 masl.

• The project wells have been pre-drilled to support

the target plant capacity plus a buffer Olkaria PPP Project Site

• The project area is in the northeastern sector of

the Olkaria geothermal field

• The power plant location is next to the existing

Olkaria II power station

• Grid connection via a ~3.75km line to the Olkaria 1

AU

• The land required for the Project is leased by

KenGen from the Kenya Wildlife Service and will be made available to the Project Company via sub-lease

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OUR PPP JOURNEY

2012

Project approved as a National Priority Project for development as PPP

2015

Procurement of the Transaction Advisors

2019 April

Approval of the Project Feasibility Study

November 2019

Commencement of the Procurement for a developer – Issue of the RFQ Our Advisors

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OLKARIA PPP PROJECT

Opportunity to enter a growing electricity market in one of the fastest growing economies in Sub- Saharan Africa

1

Strong development partner in KenGen (25% equity investment)

2

Build-Own-Operate-Transfer (BOOT) opportunity

3

Location adjacent to proven geothermal resource and available interconnection

4

KenGen Providing Project site, equity, and long term steam supply

5

Long-term PPA providing stable revenue stream

6

Positive social and environmental impact

7

Opportunity to enter a dynamic and growing energy sector with a greenfield renewable power project supported by a proven geothermal resource and strong project partner

21

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Olkaria Project Overview

First PPP project developed by KenGen under the PPP Act 2013 KenGen owns and operates 5 geothermal plants and 14 wellhead units with a total combined capacity of about 685MW. Construction of a 70MW unit is in progress

Size PPP type Procurement

Offtaker PPA duration

~140 MW

Build, Own, Operate, Transfer (BOOT) Step 1 Request for Qualification Step 2  Request for Proposal Kenya Power 25 years, and transfer to KenGen at peppercorn at the end of the PPA term Steam Supplier KenGen (25 years) Location 120 km northwest of Nairobi COD date ~3 years from financial close

Ownership

Special Purpose Vehicle (SPV)-25% shareholding by KenGen

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 Design, Finance, Construction, Operation and Maintenance of 140MW Geothermal Power Project  Design, Finance, Construction, Operation and Maintenance of above ground steam gathering system(O&M contracted to KenGen)  Design, Finance, Construction, Operation and Maintenance of about 3.75km transmission line from the Project to Olkaria I Unit 4&5 substation and the associated infrastructure(Transferred to KP/KETRACO upon commissioning)  Purchase of steam from KenGen via a 25 steam sale agreement  Sale of electricity to the Kenya Power via a 25 year Power Purchase Agreement  Transfer of the plant back to KenGen after 25 years at peppercorn

The Olkaria PPP Project Description

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23

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PPP PROJECT COMPONENTS/SHARE OF RESPONSIBILITY BETWEEN KenGen-PRIVATE SECTOR

Power Plant Interconnection SAGS Wells & wells Civil Works Finance SPV SPV SPV KenGen Construct SPV SPV SPV KenGen Operate SPV KPLC/KETRACO KenGen KenGen

24

PPP Contract Structure: Steam Supply Agreement + PPA

24

SPV

Lenders Sponsors

Shareholder’s Agreements Loan Agreements Project & Steam Supply Agreement Power Purchase Agreement

Structure is consistent with previous IPPs and market expectations.

Transfer to KenGen at end of PPA

SPV scope does not include steamfield assets.

25

FLUID RECOVERY/RESERVOIR SUSTAINABILITY CHALLENGE

• We need to ensure sustainability of the reservoir by

maximizing the geothermal fluid recovery and re- injection rate

• Current fluid recovery rate is between 40%-65% using

evaporative wet cooling towers

• 100% fluid recovery is desired around
• We believe it is possible, and the solutions

many Can the private sector come up with solutions please?

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PROCUREMENT SCHEDULE

• Prospective bidders will be qualified through the RFQ process
• Investors Conference to be held on November 27, 2019
• RFQ submission deadline: January 22, 2020
• Deadline for bidder clarification questions: [January 7, 2020]

Phase 1: Request for Qualification

• Firms / consortia qualified through the RFQ process will be invited to submit

proposals pursuant to a Request for Proposals to be issued by KenGen

• A mandatory pre-bid conference and site visit will be held approximately 6 weeks

after issuance of the RFP to qualified bidders

• Qualified bidders shall be given an opportunity to send written questions or

clarification requests to KenGen up until a deadline that will be no later than 30 Days prior to the bid submission deadline set forth in the RFP. Phase 2: Request for Proposal

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ESTIMATED TENDER PROCESS SCHEDULE

Procurement Process Stage Estimated Date RFQ Announcement November 2019 RFQ Issuance November 2019 RFQ Submission Deadline December 2019 Qualified Bidder Announcement January 2019 RFP Issuance February 2019 Pre-Bid Conference March 2020 RFP Proposal Deadline June 2020 Selection of Preferred Bidder August 2020 Finalization of Project Agreements November 2020

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THANK YOU!