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Economy

House committee questions warring GDC officials

Geothermal Development Company managing director Silas Simiyu when he appeared before the National Assembly’s  Public Investments Committee in Nairobi on Tuesday. Photo/EVANS HABIL
Geothermal Development Company managing director Silas Simiyu when he appeared before the National Assembly’s Public Investments Committee in Nairobi on Tuesday. Photo/EVANS HABIL 

A parliamentary committee on Tuesday questioned the Geothermal Development Company (GDC) managing director Silas Masinde Simiyu over the agency’s procurement of an additional drilling rig through single-sourcing from a Chinese firm.

The Public Investments Committee (PIC) had summoned Dr Simiyu over the management wars that have persisted at the agency since President Kenyatta appointed Simon Gicharu as chairman of its board.

Mr Gicharu and Dr Simiyu have been fighting a vicious war over the GDC’s multi-billion- shilling procurement of deals. Dr Simiyu had been summoned to answer questions on the funding of geothermal wells, power generation from the wells, sale of steam from the wells, the vesting of wells in Olkaria, procurement of rigs, loans so far taken by the agency and their repayment.

Dr Simiyu said GDC has not taken any loans because it relies 100 per cent on the Exchequer. He said the Treasury has always signed loans on behalf of the company and remits them as grants.

On procurement of the additional rig, Dr Simiyu said GDC invited bids in 2012 for the supply of two new 2000HP DC electric land rigs and assorted equipment.

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He said Sichuan Honghua Petroleum Equipment Company Ltd from China was awarded the tender to supply two rigs for a sum of $43,187,345.85 on November 27, 2012.

Dr Simiyu said the firm returned the lowest bids resulting in savings of $21 million, which the company used to buy an extra rig.

“When we tendered and the results returned a savings that was enough to purchase an extra rig, we asked the French bank which had given us $72.4 million for procurement of two rigs to allow us use the savings to purchase an extra rig,” he said.

‘‘We were targeting to purchase 12 rigs, but we now have six. The three rigs have already been shipped from China and are expected in the country next month,” he said.

Dr Simiyu told the MPs the procurement of the rigs was done through international competitive tendering and the French bank’s procurement procedures and those of Kenya were followed. He, however, failed to convince MPs on the award of procurement of an extra rig.

The GDC awarded SHPEC a tender to supply an additional rig at a price of $21, 593,650.92 on January 9, 2013.

On Tuesday, Parliament gave Dr Simiyu 10 days to furnish it with details of the procurement of three drilling rigs at a cost of $72.4 million (Sh6.3 billion).

“It appears the MD is not prepared to respond to the issues MPs are raising. We want you to go back and prepare a detailed brief on the chronology of events leading to the procurement of a third rig from the originally tendered two rigs,” said PIC chairman Adan Keynan.

He demanded that GDC provides the contract documents and approvals from the board sanctioning the procurement of an extra rig from money provided by the African Development Bank.

“We want you to also indicate the relevant section of the law that you relied on in awarding the extra rig to the firm that won the tender to supply two rigs,” he added.

Dr Simiyu, who appeared before the House team to respond to five issues raised by the committee in the procurement of the multi-billion- shilling rigs, was warned severally against “misleading the MPs”.

Mr Gicharu also appeared before the committee last evening and has also written to the Chief of Staff and Head of Public Service, Mr Joseph Kinyua, seeking investigations into the management of the GDC.

The procurement of the rigs has raised a storm at the GDC with Mr Gicharu accusing Dr Simiyu of procuring the machines without board approval.

“Misleading the committee is a grave mistake. You have said that the AfDB and the Treasury signed an agreement that required the tendering for the rigs to be carried out using competitive international bidding. What competitive bidding was there for the third rig?” Mr Ichung’wa posed.

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