Djibouti’s state-owned geothermal agency has proposed an initial payment of about Sh129 million to Kenya Electricity Generating Company (KenGen) towards outstanding invoices from a geothermal drilling contract dating back to 2021, offering a potential step forward in the power producer’s debt recovery efforts.
KenGen disclosed in its latest annual report that the Djibouti Office of Geothermal Energy Development (ODDEG) acknowledged outstanding invoices of US$2.13 million, equivalent to approximately Sh276 million, and proposed paying US$1 million as the first instalment.
The debt arose from a contract valued at US$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 work formed part of KenGen’s efforts to expand its technical services beyond Kenya.
The proposed payment would cover only part of the outstanding amount, leaving a balance to be recovered. The timing and terms of any subsequent payments will be important in determining how quickly KenGen can collect the remaining debt.
The contract has previously attracted scrutiny over payment safeguards. The Office of the Auditor-General flagged weaknesses in the contractual terms, noting concerns that they did not adequately protect timely payment for the work undertaken.
KenGen has developed expertise in geothermal exploration, drilling and consultancy through its domestic projects, including operations at the Olkaria geothermal fields. It has used that experience to pursue work in other African markets seeking to develop electricity from underground heat.
Its overseas projects have included drilling work in Ethiopia and Djibouti, as well as geoscientific consultancy in other countries. Such contracts offer an opportunity to earn revenue from technical services, but delayed payments can limit the financial benefits of international expansion.
KenGen reported that revenue from diversification activities, including drilling and consultancy, declined to Sh122.1 million in the financial year ended June 2026, compared with Sh263.6 million in the previous year and Sh759.2 million in 2024.
The company continues to pursue regional opportunities, including negotiations for drilling and geoscientific work in Djibouti and Zambia. Its ability to secure payment for completed projects will be important as it seeks to grow this part of its business.
The proposed instalment offers a possible breakthrough in a debt that has remained outstanding for years. However, the full recovery will depend on whether ODDEG follows through with the initial payment and settles the remaining balance.
