Tulu Moye Geothermal Axes Operations, Blames OLF-Shane

State reps argue financial, technical troubles behind closure, deny security threats

A landmark geothermal power project that was poised to become the country’s first independent power producer to operate at a commercial scale is closing down but the reasons why remain unclear.

Tulu Moye Geothermal Operation Limited’s executives contend that security threats from OLF-Shane are behind the decision to shutter their reported two billion dollar geothermal energy project in the Oromia region’s Arsi Zone. However, government officials say the developer ran out of investment financing following a series of unfruitful drilling attempts.

Tulu Moye, a joint venture between French investment firm Meridian SAS and the Icelandic Reykjavik Geothermal Limited, was established in 2017 with financial support from the Geothermal Risk Mitigation Facility for Eastern Africa, the African Development Bank (AfDB) and the US Trade and Development Agency. The firm began drilling works in the Arsi Zone three years later, and it was expected to produce 150 MW of energy by 2025.

However, sources disclosed to The Reporter that the company is on the verge of shutting down its operations completely, paying its employees a four month salary advance in February 2024.

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“It has been six months since we were notified that the project has ceased. We were paid a four month advance,” a former employee told The Reporter. Tulu Moye used to employ hundreds of people, but the only part of the venture that is currently ongoing is a community water project.

Although the firm notified its workers about the pending shutdown six months ago, sources say they had been idled for a year.

The sources told The Reporter that dozens of armed men stormed the project site in 2023, leading to the immediate withdrawal of foreign investors and developers who feared the security risks.

Marriott Drilling, a UK-based firm that took over as the primary contractor on the Tulu Moye project following the exit of Kenya’s KenGen, also ceased working completely in light of the incident with the armed group. KenGen had previously exited the venture following unspecified disagreements.

Sources disclosed the developers behind Tulu Moye have already invested upwards of 100 million dollars and are not willing to inject any more financing under the circumstances.

“There are internal reports that the funding was mismanaged. The money spent does not match the progress on the ground. But the project was making good progress when the armed group intervened. [The armed men] entered the project site, warned the developers, and left,” a well-placed employee told The Reporter.

This account, however, contrasts glaringly with the narrative put forward by executives of the state-owned Ethiopian Electric Power (EEP), which was the client that had entered into a power purchase agreement with Tulu Moye.

Ashebir Balcha (Eng.), CEO of EEP, confirmed to The Reporter that the project has ceased and the developers have withdrawn. However, he says the fate of the project depends on ongoing negotiations with the developers.

“The developers and foreign investors claim security concerns, but we’ve ensured that there are no such concerns in the project area. The government is running other projects in the vicinity of Tulu Moye. For instance, the Assela Wind Farm project is operating peacefully in the same Zone. There are security issues but the government is ensuring that no incidents occur at project sites,” said the CEO.

He attributes the setbacks to technical problems.

“The real reason [for the shutdown] is that the developers failed to find the geothermal energy source after investing a large sum of money. We also believe the financiers are no longer willing to inject more funding after seeing the drilling was not fruitful,” Ashebir told The Reporter.

The CEO claims the developers were unable to locate the geothermal reservoir after a number of drillings.

“The developers talked to French media, claiming they left the project because of security issues. But we are arguing that is wrong. The real reason is the developers failed to find the geothermal reservoir. There are also financial concerns,” said Ashebir.

Tulu Moye is not the only large-scale geothermal power project to run into trouble in the Oromia region. A recently published report from the Ministry of Planning and Development reveals that the Aluto-Langano Geothermal project has temporarily stopped drilling after testing last year confirmed a 25 MW capacity near the town of Ziway (Batu).