The deal between KenGen and Tulu Moye Geothermal Operations (TMGO) PLC, an independent power producer will also include installation of water supply systems and equipment.
According to the contract, KenGen will supply drilling materials and provide operation and maintenance services, both for drilling equipment and the water supply system.
It is funded by the World Bank through a $76.8 million loan to the Ethiopian government.
The first Phase includes the acquisition of drilling rigs while the second phase entails the provision of drilling services.
KenGen is supplying nearly 30 per cent of the components of the second phase which translates into about $6.2 million.
The Kenyan power producer is on a diversification strategy to leverage its expertise in geothermal energy by offering commercial drilling services, geothermal consultancy across the continent.
It is also exploring expansion possibilities and soon extend to oil and mining sectors in the region.
It has a geothermal installed capacity of 698MW and is the top geothermal power producer in Africa.
Revenue generated in the last financial year from geothermal power plants has gone up from Sh16.1 billion in 2017 to Sh17.1 billion in 2018, which represents a 6% growth.