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Economy

Stanbic loses Sh1.4bn in GDC, Chinese firm deal

Stanbic Bank Kenya has lost Sh1.4 billion after the Geothermal drilling deal between a Chinese firm and the State- owned Geothermal Development Company collapsed.

The State agency on Thursday announced recovering the amounts paid to the Chinese Hong Kong Offshore Oil Services (HOOSL) to drill a well back in 2014 after the project failed to take off.

GDC Managing Director Johnson ole Nchoe said the amount recovered will now be used by the firm to drill the wells that were envisioned to boost Kenya’s geothermal energy mix as Kenya pushed to have higher mix of renewable energy.

“The Geothermal Development Company has successfully recovered $14,629,952 (about Sh1.4 billion) from Stanbic Bank Kenya Limited that had been paid to a Chinese firm for drilling operations at the Baringo-Silali Geothermal Project,” Mr Nchoe said.

Stanbic Bank had provided the Advance Payment Guarantee for HOOSL in favour of GDC to cushion the first payment of 25 percent as per the drilling deal in Baringo.

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The recovery which has now hit Stanbic saves the tax payers from a potential Sh1.4 billion loss they were faced with since the Chinese firm did not dril even an inch of the wells. GDC now says the plans to drill the wells are well underway with one drilling rig already on site while two wells have been completed.

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