Board clashes with Keter over CEO’s term, blames top officials for loss of millions

Energy Cabinet Secretary Charles Keter’s pointed desire to keep current CEO of the Geothermal Development Company (GDC) in office despite the board’s recommendation against the move has exposed the rot at the corporation.

From undeclared company losses, massaged profits, spiraling tax liabilities now at Sh4.7 billion, delays of multi-billion shilling projects, assets worth Sh3.6 billion left to waste away in the field, it is the story of disgrace for the fairly new corporation.

Sources told Sunday Standard that the board is preparing a long-winded justification on why John ole Nchoe must leave the organisation following the expiry of his three-year contract.

Besides, a whistle-blower account has churned out shocking claims of schemes in which the company may be losing millions of shillings in inflated parking fees for field offices, endemic fuel theft running into millions of shillings a month and overblown pricing for small tenders.

No revenue

Keter had demanded a detailed understanding of the recommendation, including formula and procedure used to rate him as well as how they individually scored him, the latter which they have rebuffed.

Sources privy to deliberations of the board say it faulted current management led by the CEO for failing to create a single additional revenue to the current steam sales to KenGen from the Olkaria wells.

Besides, they argued that the management was presiding over wanton under-utilisation of company resources, among them five out the seven rigs owned by GDC, abandonment of wells and walking the country through a financial landmine in the Sh1.4 billion advance pay to a Chinese firm.

“When they met, the board noted an increase in accumulated tax liabilities from Sh6 billion in 2016 to Sh4.7 billion in 2018. This is among the issues they are taking up with Keterbesides the doubts they now have on the company’s alleged profitability,” a source privy to the deliberations of the boardsaid.

Small fish

For instance, Well Number 01 -- the first well in Menengai drilled at Sh1.2 billion -- and which produced large amounts of steam (36MWs) is now said to have been invaded by small fish who have blocked production.

In addition, the lack of proper due diligence on well sites and involvement of professionals is said to be displeasing the board. In 2018 alone, eight wells were drilled at huge costs but only one managed to produce a meagre 3MW of steam.

The board is also faulting the CEO’s leadership for the failure of the ambitious Menengai 105 Megawatt geothermal project which was awarded way back in 2014 to three companies, each billed to generate 35 MW.

Owing to delays in sorting out land ownership in the project area, delays in providing partial risk guarantees to the three companies and other forms of delays, the three companies have not commenced construction for the contracts signed in 2014. In sharp contrast, other parastatals that have a role in the project have long done their bit.

The board is also said to be irked by the management’s inability to explain itself on various audit issues and failure to arrest the ongoing waste of resources.

The other bone of contention is alleged insubordination in a number of matters, among them the signing of Collective Bargaining Agreement between GDC and its union workers.

Besides the CBA, an agreed trip between GDC management and union to Zanzibar is also said to have irked the board.

There was also the management’s focus on the mundane at the expense of the crucial like the unexplained dalliance with the company’s 300-member choir.

Guidelines

They are reported to have ignored a November 2018 boardhuman resource committee freeze on new employment, ignored board guidelines on internships and attachments and delayed implementation of an approved staff mortgage scheme.

“Overally, the burden for all these issues rests with the CEO. The board does not feel that the CEO takes it seriously and consequently, they do not feel he has the requisite drive to work with them,” added the source.

On the fuel losses, Rig 3 (Kifaru 1) which is currently drilling well MW34 has no fuel for the last one month, a period in which claims of fuel theft were reported.

The lack of fuel is not the first as in December 2018 at Well MW 20B operated by Rig 7 (Ndovu 3).

A rig in Paka in Tiaty, Baringo County, is not working due to lack of water and the company has been accused of mobilising it in haste late in 2018 without considering constraining factors.

Nchoe denied all the allegations when he was contacted by Sunday Standard. In a statement, he said that has been said is false and denied the Sh800 per vehicle parking fee allegedly charged on GDC for field staff in Nakuru.

“But the costs captured by you are erroneous,” he said through an e-mail. He declined to speak about his wish to be retained.

Nchoe’s term expires on April 17, 2019 although the boardfeels it ended on March 25, 2019 owing to accumulated leave days.