Geothermal firm sued in Sh3.3bn drilling rigs contract dispute

A company has sued the Geothermal Development Corporation (GDC) seeking Sh3.3 billion compensation for termination of a tender.

Bonfide Clearing and Forwarding Limited moved to the High Court after rejecting Sh38.5 million that an arbitrator awarded it for work done, loss of business and damages.

The GDC signed a contract with Bonfide Clearing and Forwarding Limited in 2012 to move geothermal drilling rigs and other equipment in 40 lots, with each costing Sh42 million within a distance of 11 kilometres.

The entire deal was worth Sh1.7 billion.

The State corporation on September 13, 2016 issued a notice to terminate the contract following which the contractor put in a claim for Sh13.4 million for works done and Sh1 billion for loss of revenue on the remaining 24 rig moves.

Auditor-General Edward Ouko in fresh report says the matter was subsequently referred to arbitration, with the contractor claiming Sh3.3 billion for work done, loss of business and damages.

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The GDC management told Mr Ouko that the arbitrator dismissed the Bonfide’s claim save for a provable amount of Sh38.5 million.

“This legal suit has since been referred to the High Court by the claimant, who felt dissatisfied with the award by the arbitrator. By the time of conducting this report, the matter was pending hearing at the High Court,” Mr Ouko says in a qualified audit opinion of the GDC books of accounts for the year to June 2016 tabled in Parliament by Leader of Majority Aden Duale on Thursday.

Mr Ouko says the contract provided for “prorated incremental” charge levy where the loads per move exceeded 50. The services were, however, re-tendered in 2012 and re-awarded to the previous contractor in October 2012 for two years or 40 rig moves on a need basis, at Sh42,746,000 per move estimated to constitute 100 loads.