Kenyan firm, Gulf Power, plans to generate 80 megawatts (MW) of power from thermal sources for the national grid.
Several parts of Kenya are experiencing severe drought, which could lead to the use of diesel to generate power as has happened in the past.
Meteorologists are forecasting depressed rainfall within the first six months of 2011.
The east Africa nation relies heavily on hydroelectric dams for power, which have proved inefficient in times of drought.
"The generating system will comprise heavy fuel oil-powered generators capable of generating a net electrical output of 80.32 MW," Gulf Power said in a statement.
The firm said it had applied for a power generation licence from the sector regulator.
Another power generating firm, Iberafrica, said it would buy 320,000 tonnes of heavy fuel oil for its 110 MW power plant in the capital for use over the next 24 months.