(Yicai) Aug. 14 -- China's Kaishan Group, an air compressor maker that is transforming into a renewable energy company, plans to offer USD11.3 million to acquire Orpower Twenty Two, a Kenyan geothermal power firm, to build its first geothermal power plant in Africa.

A unit of Kaishan penned an equity transfer agreement with Symbion Power Holdings, a shareholder of the East African energy company, the Quzhou-based buyer said in a statement today. The sum includes USD3.3 million for assets and USD8 million for technological service fees.

The Chinese enterprise's first African endeavor is strategically located as Kenya is rich in geothermal resources. As of Dec. 31, 2022, the African country had an installed capacity of 950 MW of geothermal power, per Kaishan.

Orpower has the right to develop and operate a 35-megawatt geothermal power plant in the Menengai field under the build-own-operate model which refers to private sector funding for a long-term project. The BOO model is beneficial for controlling costs and risks, per the Chinese firm. The Kenyan company has secured a 30-year license to generate electricity and it has also respectively penned 25-year purchase agreement with Geothermal Development, a local state-owned geothermal resource developer, and sale agreement with Kenya Power and Lighting, a utility company. 

New York-headquartered Symbion, the original shareholder of the project, got the right to develop the plant and formed the target in 2014 but construction has not yet begun because of many factors. Last year, Orpower Twenty Two recorded no revenue with a net loss of USD869,500 last year, and its net assets tallied as a negative of near USD5.5 million by the end of the year. 

After the transfer, Kaishan intends to inject additional capital into Orpower and start building the plant as soon as possible, it said. 

In the first 25 years of operations, the project is expected to generate around USD400 million in pre-tax income for Kaishan in total. Besides this, the Chinese firm is the engineering, procurement, and construction contractor for another 35-MW project in the region, giving it skills to control costs, it said.

Kaishan is transforming into an international green energy company as the firm is involved in geothermal projects in countries including Indonesia, the United States, and Hungary.

Shares of Kaishan [SHE: 300257] dropped by 0.4 percent to CNY13.65 (USD1.90).

Editor: Emmi Laine