Geothermal company heads still in hot water

The top management of the Geothermal Development Company will return to the Public Investments Committee (PIC) this week as investigation continues into corruption claims in the company.

At the centre of the dispute is the procurement of three rigs from Chinese firm Sichuan Honghua Petroleum Equipment Ltd (SHPE).

From the presentation to the committee by GDC managing director Silas Simiyu, it emerged that the Chinese firm was awarded a contract to supply three drilling rigs instead of two, as indicated in the tender documents.

MPs, led by vice-chairman Kimani Ichung’wa, questioned the award. SHPE was awarded the tender for the supply of two rigs at Sh3.7 billion ($43.1 million) on 27 November, 2012, then was later allowed to supply an additional rig at Sh1.84 billion ($21.5 million) on 9 January.

Dr Simiyu said the African Development Bank, which was funding the project and approved the limited international bidding used in the procurement process, concurred with the decision to give the additional contract.

“The issue was, should we go back to doing a new tender or should we add to this contract, since we had not signed the contract for the two rigs, or should we award three rigs instead of two? That’s when the bank gave us the okay,” said Dr Simiyu.

However, in what could show that the board and the management are not working in tandem, the board chairman, Mr Simon Gicharu said the latter did not follow the laid-down procedures and that the award was issued without the board’s knowledge and approval.

“This procurement may not have met the legal requirements for direct procurement or variation,” Mr Gicharu said in his presentation.He also said that on 16 January, the contract price was varied by an additional Sh129 million ($1.5 million).

Mr Gicharu further said that the “no objection” letter issued by African Development Bank boss Gabriel Negatu came on 28 January, 2013, 19 days after the award of the additional job to SHPE. Some PIC members were not convinced by Dr Simiyu’s explanation that the bank had concurred with the board’s move.

“The assumption is that this country does not have procurement laws.If we go by that route, then we’ll be saying that every Tom, Dick  and Harry can come with their own terms and conditions and then say, ‘this is the way I want my business run,’” said Mr Adan Keynan, the chairman of PIC. He said the arrangement would be contrary to the Public Procurement and Disposal Act, the Public Finance Management Act, and the law of contract.

The MP said because the company awarded the contract for two rigs after competitive bidding, there was no reason to award a third contract without going through the same process.

“What guarantees do you have that you would never have gotten someone else who would probably have supplied one rig probably cheaper than this contract you awarded?” asked Mr Ichung’wa.
On 18 March, Dr Simiyu was asked to make better preparations and submit another presentation to PIC after he appeared to contradict himself while under pressure from the MPs.

“The way I see it, there are issues that are not consistent with the questions that we have asked. The best thing is for the CEO to go back, give us the chronology of events with all the necessary annexures, then come back and meet us because either you are not ready or have decided to come and incriminate yourself,” said Mr Keynan.

Chris Wamalwa (Kiminini, Ford-Kenya) however suggested that the law allows a firm to be given a supplementary Local Purchase Order on the basis of an existing contract but it was decided the committee would make a decision on that in its in-house meetings.