MPs summon ex-GDC bosses over Sh211m loss

National Assembly’s Public Investment Committee Chairman David Pkosing. [File, Standard]

A parliamentary team has summoned ex-Geothermal Development Company top officials over a Sh211 million arbitration loss in relation to a Sh4.2 billion contract awarded to a UK firm- Cluff Geothermal Company.

The National Assembly’s Public Investment Committee on Commercial Affairs and Energy has directed that former Geothermal Development Company (GDC) Director Silas Simiyu, the procurement official in charge of the tendering process and evaluators at the time GDC entered into a contract with the UK firm to appear before the watchdog committee.

The directors of Cluff Geothermal Company have also been summoned before the committee.

The officials are expected to plead their case before the Pokot South David Pkosing-led House team and prove that they were knowingly not responsible for the loss of millions.

“This looks like it was a tailor-made contract to ensure that Cluff Geothermal company got the contract, even though it did not have the capacity to see it through,” said Chairperson Pkosing.

According to documents tabled before the committee, the Sh211 million loss was incurred after GDC lost an arbitration case between it and Cluff Geothermal Company at the London-based International Arbitration Tribunal which ultimately led to the UK firm being awarded Sh2.7 billion ($26 million).

The contract with Cluff was entered in 2013 and was for the drilling of 20 geothermal wells at a cost of Sh4.2 billion ($41 million) and had been issued under the tenure of former GDC Director Silas Simiyu. 

The works were awarded to Cluff Geothermal and its local partners Great Rift Drilling and Ardal Risk and Support Services Ltd..

GDC Managing Director Paul Ngugi, also explained that under the contract, each well was to be drilled to a measured “true vertical depth” or 1,000 metres or total true vertical depth to a minimum of 2,000 meters.

A decision by GDC to decommission the works however saw the firms sue GDC, with the UK firm moving to the London Court of International Arbitration (LCIA), accusing GDC of breach of contract.

The managing director submitted that Cluff Geothermal Company and its local partners abandoned works due to financial constraints and even went ahead to demobilise the drilling crew and equipment on June 23, 2016.

Cluff Geothermal would however declare a dispute at LCIA on April 15,2 017 and sought to be paid Sh2.7 billion ($26millio ) in unpaid invoices for the period from March 2015 to June 2016, damages in the form of lost profits and consequential losses related to delayed payments of certain invoices.

It was however awarded an arbitral award of Sh2.4 billion.

The committee which was conducting a probe into the matter yesterday, sought to understand why the contract was awarded to the firm which had at the time demonstrated capacity to undertake the same.

Committee vice-chair Lilian Gogo hard pressed Ngugi who had appeared before the committee alongside Solicitor-General Shadrack Mose, to explain the questionable decision to award Cluff Geothermal company the tender.