Galana Energies has bagged a Sh1.105 billion deal to supply diesel for the Menengai and Baringo-Silali geothermal projects, lifting the veil on lucrative contracts for local oil firms taking on the cash-rich multinationals in the market.
Disclosures by the Geothermal Development Company (GDC) shows that Galana was already supplying the diesel by the end of last year. The contract period is however not disclosed.
The deal is a major boost to the local oil firm given that it is one of the Kenyan oil firms that are fighting off stiff competition from well-oiled multinationals for the fuel retail market.
GDC is undertaking the Baringo-Silali Geothermal Power Project to generate 300 Megawatt (MW) of clean power while the Menengai Project entails developing wells with a capacity to generate 465MW.
Galana Energies is the sixth biggest oil major in Kenya and had a market share of 2.71 percent as at June last year, based on official data from the Energy and Petroleum Regulatory Authority (Epra).
Vivo Energy is the biggest player with a share of 22.24 percent, followed by Rubis at 15.56 percent and Total at 15.06 percent.
The three multinationals control over 52 percent of the local fuel market, underscoring why lucrative contracts for supply of fuel are key to lifting the fortunes of the local-owned oil firms. Scores of locally-owned oil firms, including Galana, are fighting for less than half of the local fuel market.
GDC did also not disclose the amount of fuel that Galana is supplying for the two geothermal projects and for how long.
In 2023, GDC had floated a similar deal seeking an oil marketer to supply diesel for the two projects for a period of 15 months. It is not clear whether this is the same deal that Galana bagged.
Diesel is mainly used to power the heavy drilling rigs, pumps, and other equipment needed for well drilling. The fuel also comes in handy in powering the construction camps, especially for areas not linked to the national grid.
In the Menengai Project, GDC contracted Globeleq of the United Kingdom, Sosian Energy owned by the Daniel Moi family, and Ormat Technologies of the US, with each of the three contracted to set up a 35MW plant. Sosian has already completed its plant.
The Baringo-Silali Project is jointly funded by the Government of Kenya and the German Development Bank (KfW) to tap geothermal in Paka, Korosi and Silali where between 15 and 20 wells are set to be drilled.
