The Geothermal Development Company (GDC) is seeking alternative power from steam sources to replace the more expensive diesel used to run its drilling rigs at the Menengai site, Nakuru.
The company said Tuesday it had invited bids for the installation of an emergency five to 10 megawatt (Mw) geothermal power plant that would churn energy to used for operating the rigs.
“The geothermal modular power plant to be installed at the Menengai geothermal field and commissioned within the shortest time possible so as to reduce the high cost associated with drilling using diesel,” the company said in a tender that closes on May 2.
Successful bidders would be handed the contract under a 15-year build, own, operate and transfer (BOOT) arrangement.
Energy from thermal are relatively cheaper than that from fossil sources and available in huge portions in the natural reservoirs in the Rift Valley area where GDC is currently developing several wells. It targets to develop at least 5,000Mw in the region.
Demand for diesel has continued to rise sharply both locally and globally, pushing up prices.
Diesel is the main fuel for machinery in the agricultural sector in the country, which contributes almost a quarter of the Gross Domestic Product (GDP). Diesel, which accounts for about 40 per cent of the fuel products sold in Kenya, is also key in public and cargo transport businesses.
Globally, diesel prices have climbed faster than prices of lighter fuels such as petroleum in what is being mainly attributed to a new phenomenon dubbed “the diesel take-off”.
A recent report by the Organisation of the Petroleum Exporting Countries (OPEC) said that globally, a bigger chunk of cars are now running on diesel as part of the big shift from petrol.
The oil cartel expects the increase in demand for middle distillate (diesel) to account for about 60 per cent of the forecast 20 million barrels per day (bpd) rise in global oil demand by 2030.
OPEC said that by end of 2008, the difference in demand for gas oil/diesel was around three million bpd. That is expected to rise to 6.5 million bpd by 2020, higher than for petrol.
Besides the dynamics in the global scene, diesel prices in Kenya may climb again starting June should the Treasury implement its plans to withdraw special tax on the commodity, kerosene and wheat to close widening revenue gaps.
Last year, the government removed excise duty on kerosene and reduced tax on diesel by 20 per cent to protect consumers from high prices.
It also waived duty on maize for six months and on wheat imports for a year to boost stocks locally after drought reduced harvests. The window for untaxed maize imports ended last month.