Ethiopia: Prequalification for Tulu Moye EPC

17 Apr 2019 | 3 minute read

A request for expressions of interest has been issued by Tulu Moye Geothermal Operations Plc (TMGO) for an engineering, procurement and construction (EPC) contractor for the 50MW first phase of the 520MW Tulu Moye project in the Eastern Rift Valley, Ethiopia. Tulu Moye is being developed by TMGO, which is ultimately owned by the Meridiam Infrastructure Africa Fund and Reykjavik Geothermal Ltd.

The contractor will provide a turnkey geothermal power plant and associated steam field gathering system. Proposals for operations and maintenance will be considered as well as potential vendor financing to support development to financial close, although equity investment is not currently sought. This is the first phase of a two-stage prequalification process and aims to compile a longlist of qualified contractors. Bids are due by 24 April 2019.

The full first phase project consists of drilling of around ten production wells and two injection wells, construction of a steam-gathering and injection system and a single unit water-cooled condensing steam power plant, a 230kV double bus switchyard and 230kV transmission line to the Koka-Wakena 230kV line. It is expected to cost $260m, financed 75% with debt and 25% with equity.

The second and third phases of the project are each planned to be 100MW while a fourth phase will add 270MW.

The current schedule anticipates initial drilling for the first phase to be completed by August 2019, with well testing completed by December at the same time as an EPC contractor is selected and a steam turbine purchased. Financial close is anticipated in April 2020 with commercial operations in December 2021. Work on phase II will begin following phase I financial close and an EPC award for phase II is scheduled for June 2021.

The Tulu Moye concession covers a total area of around 588km2 with a core target area of 100km2 centred on the Tulu Moye volcano. The prospect area contains a young volcanic system which Reykjavik Geothermal and Ethiopian scientists have been studying since 2014. The sponsors believe the area contains one of the best geothermal resources in the world.

A 25-year power purchase agreement and implementation agreement for a total of 520MW were signed in December 2017 with Ethiopian Electric Power (EEP) and the Ministry of Water, Irrigation and Electricity and Ministry of Finance and Economic Cooperation. The government is guaranteeing payments by EEP under the terms of the implementation agreement. The entire complex is scheduled to be completed within seven years and nine months of ratification of the implementation agreement, which is expected in Q2 2019.

The Geothermal Risk Mitigation Facility (GRMF) awarded a grant for $1.3m to conduct surface studies in November 2015, which were completed in Q2 2016. In August 2018, the United States Trade and Development Agency awarded a $1.2m grant for a first phase feasibility study to Delphos International Ltd. Discussions are under way with a lender group that includes the African Development Bank, United States’ Overseas Private Investment Corporation, the European Investment Bank, Germany’s DEG, the Netherlands’ FMO, and France’s Proparco.

Iceland-based company Mannvit-Verkís (M-V) signed an agreement with TMGO in October 2018 to become owner's engineer. M-V will be collaborating with Langsvirkjin Power, ÍSOR and MGM Consult for the project. At the end of October 2018, GRMF announced their fifth-round grant review in which seven projects, including Tulu Moye, were selected to receive a combined $28m.

Contact: [email protected]; [email protected]; [email protected]; [email protected]; and [email protected].  

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