GDC boss in trouble over Sh6b Chinese contract

The chief executive officer of the Geothermal Development Company has been put to task over the manner in which the State Corporation gave a Chinese firm an additional job in a contract worth Sh6 billion.

Dr Silas Simiyu was hard-pressed to explain to the Public Investments Committee why China Petroleum Technology and Development Corporation was given the contract to put up three rigs after initially winning the tender for two in 2011.

Members of the PIC were concerned that the award of the job to the China Petroleum and Drilling Company appeared irregular.

Dr Simiyu said that the allocation from the government was $70 million (Sh6 billion) and after tendering, they got $43 million (Sh3.7 billion) as the lowest bid for two rigs.

He said they then went back to the African Development Bank, which had lent the Kenyan government the money, and were allowed to procure another rig using the money left over from the first tender.

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

He said the argument was that the procedure was in line with the rules of the African Development Board.

Dr Simiyu said the procurement process was supervised by the Bank, which had given the government the money partly as a loan and as a grant. The government then gave GDC the money as a grant.

But the PIC members were not convinced, with chairman Adan Keynan arguing that argument presented a challenge.

“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 Keynan.

He said that arrangement would be contrary to the Public Procurement and Disposal Act, the Public Finance Management Act and the Law of Contract.

Kimani Ichung’wa, PIC vice chairman said that because the company awarded the contract for the 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.

Dr Simiyu said the award of the contract for the three rigs was done at the same time when they realised that have a surplus but then appeared to contradict himself when asked to clarify by stating that it was done after the first two.

He insisted that they had documents showing that the Bank had allowed them to spend the money that way but then admitted that his initial assertion was misleading.

With members annoyed by the inconsistency of Dr Simiyu’s answers, Mr Keynan stepped in to create a way out by seeking to have him meet the committee when he is better prepared.

“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 and then come back and meet us because either you are not ready or have decided wilfully to come and incriminate yourself,” said Mr Keynan.