Economy

Chinese firm seeks Sh2bn after mineral deal freeze

MUNYES

Petroleum and Mining Cabinet Secretary John Munyes. FILE PHOTO | NMG

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Summary

  • The Chinese firm, Geological Exploration Technology Institute (Geti), has billed the government an amount equivalent to 30 percent of the contract, which was quoted at Sh6.7 billion.
  • The invoice follows the government freezing the mapping contract and instead opting for the survey to be done by local geologists and the National Intelligence Service (NIS).
  • UK-based International Geoscience Services (IGS) and Canadian firm Paterson, Grant & Watson Limited (PGW) -which are consulting for Kenya warned that survey design by GETI was not appropriate for the country.
  • The warning came amid fears that foreigners could use the data for own benefit or put sanctions in its access.

A Chinese contractor is seeking Sh2 billion for mapping Kenya’s mineral deposits even before the start of mapping job after its contract was put on hold.

The Chinese firm, Geological Exploration Technology Institute (Geti), has billed the government an amount equivalent to 30 percent of the contract, which was quoted at Sh6.7 billion.

The invoice follows the government freezing the mapping contract and instead opting for the survey to be done by local geologists and the National Intelligence Service (NIS).

“The ministry is yet to honour payment of 30 percent of the initial contract sum as invoiced for lack of adequate budgetary provision,” Petroleum and Mining Cabinet Secretary John Munyes told Parliament.

Mr Munyes said the Sh1.3 billion in the printed estimates of the year ending June 2018 was inadequate to pay the bill.

Treasury did not honour a further request to increase the allocation to Sh2 billion to allow the ministry pay GETI, despite existence of a commercial contract between the ministry and the contractor signed on May 19, 2014.

“At the time GETI was put on hold, we already had a running contract with them. A contract is binding and therefore we have to pay at the end of the day,” said Mr Munyes.

MPs have questioned the rationale for the ministry to pay the contractor for work not done.

Implementation of the national airborne geophysical survey has faced delays following security concerns of the data as envisaged under GETI.

UK-based International Geoscience Services (IGS) and Canadian firm Paterson, Grant & Watson Limited (PGW) -which are consulting for Kenya warned that survey design by GETI was not appropriate for the country.

The warning came amid fears that foreigners could use the data for own benefit or put sanctions in its access.

Kenya has proven deposits of titanium, gold and coal. The country is also understood to hold significant deposits of copper, niobium, manganese and rare earth minerals.

Successive governments have had little success in trying to develop Kenya’s mining potential, with inadequate data and an outdated legal framework discouraging foreign exploration companies.