Questions as UK firm pockets Sh2b for incomplete wells

The Geothermal Development Company (GDC) paid a UK firm Sh2.4 billion for incomplete wells in Menengai, Nakuru county and now Parliament wants the matter probed and those found culpable charged. 

MPs directed yesterday that the Attorney General appears before them to explain how the company ended up paying the amount to the Arbitration Court in London long after it cleared the contract fee of Sh4.2 billion.

MPs heard yesterday that the GDC was ordered to pay the bill by a London-based LCIA which awarded a Sh2.7 billion ($26,264,509) claim to the UK’s Cluff Geothermal Company which was contracted to drill the Menengai wells.

Company Managing Director Paul Ngugi (pictured) had told the committee that the Sh2.4 billion arbitral award was paid even after the company cleared Sh1.9 billion ($14,551,954) for the 14 wells the British energy firm drilled.

“We want this matter investigated to the fullest. The MD is being economical with information. First, you told us that your company exclusively drilled the Menengai wells, but you have now changed the story to that there were private firms that did the surface drilling and you came into complete the wells with rigs you said were slow,” David Pkosing who chairs the National Assembly’s Public Investment Committee on Commercial Affairs and Energy said.

The committee has thus summoned the Attorney General, who handled the arbitration case at the London-based International Arbitration Tribunal (LCIA) which awarded Sh2.7 billion ($26,264,509) to a British energy firm.

Attorney General Justin Muturi and Solicitor General Kennedy Ogeto were asked to appear next week before the committee to explain the role played by their offices in the case.

Former GDC managing director Silas Simiyu, who was in charge when the contract in question was awarded, and the local and external lawyers who represented the company in the arbitration have also been summoned to appear.

“How were the UK and local partners procured? We will start a full-scale inquiry starting with the Attorney General and Solicitor General next week. This arbitration case was a conduit to steal taxpayers’ money?” asked Kaloleni MP Paul Kazungu.

MPs questioned why GDC contracted the services of Cluff Geothermal Company, which Ngugi confirmed had no capacity to drill the wells.

“To us the whole arbitration process was similar to a kangaroo court where people use judicial process to cut deals. You had no money to pay the contractor, he abandoned work, went to arbitration, won an award and got paid Sh2.4 billion immediately. This entire thing appears suspect,” Pkosing noted.

According to Ngugi the UK firm and its local partners-Great Rift Drilling and Ardal Risk & Support Services (K) limited-sued the GDC after decommissioning works.

 It was then that the UK firm moved to the London Court of International Arbitration (LCIA), accusing GDC of breach of contract.

Ngugi explained that in 2013 the GDC entered into a contract for the provision of drilling services for 20 geothermal wells at its Menengai geothermal field for Sh4.2 billion ($41,219,208).