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How the Kenyan Media has Handled the GDC Scam Part III

simiyu

As I told you. There have been complaints all over . These are newspapers articles raising questions about GDC scam. Inconsistent scenarios, corruption , wrangles and key questions that have been Ignored . To save Kenyans Poor Taxes, we need a change of leadership at this corporation and investigations . That will be Justice. Take your time and go through the details .

27/12/2014

Tender rows and interests stall key Jubilee projects

WHITE ELEPHANTS

Similarly, the construction of the Greenfields project, an expansion of the Jomo Kenyatta International Airport, is yet to start despite the pomp and colour at the launch.

“The real issue may be lack of finances and lack of political will as well as competing political interests. Some of the projects have stalled and will become white elephants,” said Dr Nyandemo.

At the Geothermal Development Company (GDC), boardroom battles linked to the company’s handling of project loans and procurement tenders pitted the CEO, Dr Silas Simiyu, against former board chairman Simon Gicharu. Mr Gicharu insists some projects worth Sh1.9 billion are suspect and were undertaken without the board’s approval.

“At the GDC are issues of tendering that must be dealt with if the country is to benefit from the vast geothermal resources,” said Dr Nyandemo.

Hedwig Nyalwal told the Sunday Nation that the private sector has been a key player in the stalling of government projects.

Section Politics

22/12/2014

Kenya leads world in tapping geothermal sources of power

Kenya led the world in 2014 in harnessing geothermal energy sources.

Internationally, the value of geothermal is recognised and supported by new laws and policies. In its website, Kenya’s Geothermal Development Company (GDC) says it plans to raise geothermal energy production to 810 megawatts by 2016. Bulk electricity consumers, mainly industries, have been asked to spell out their energy demand.

GDC boss Dr Silas Simiyu expressed optimism with the Menengai site saying 105 megawatts would be ready for supply in the next 12 months. This follows the signing of a deal with three Independent Power Producers — Quantum Power East Africa, Orpower Twenty Two (a consortium of Ormat, Civicon and Symbion) and Sosian Energy — for the production of 35 megawatts each to the national grid.

GDC said it was in the process of developing a database of industrial users interested in power supply and geothermal energy and by-products such as sulphurous acid with future plans pegged on establishment of industrial parks near electricity generation sites to ease distribution challenges and also provide them with subsidised power.

“GDC has drilled a mega well capable of producing 30 megawatts at Menengai geothermal project instead of the anticipated average of five megawatts per well that takes 80 days to drill. Therefore striking a 30 megawatts well is akin to drilling six wells at once for the cost and time of one,” said Dr Simiyu adding that the savings would be passed on to consumers in reduced costs of power bills.

Cheaper tariff

Other sites currently under exploitation include Silali in Baringo County and Longonot.

“GDC is contributing to economic development by availing steady electricity to manufacturers and bulk consumers at source. GDC will make it possible for industries to enjoy a cheaper tariff and thus lower the cost of doing business owing to reduced transmission and distribution costs,” it said.

GEA members will meet on February 24, 2015 for a briefing on the state of the geothermal industry, in Washington, D. C.

 

Section Smart_Company    By [James Kariuki @kamaukariuki [email protected]]

26/11/2014

MPs to probe energy firm over new posts

 

By JOHN NGIRACHU
The National Assembly will investigate the affairs of the Geothermal Development Company after it received a petition questioning the management of the State corporation.
Speaker Justin Muturi directed the Energy, Information and Communication Committee to investigate the matter after the presentation of the petition by Rangwe MP George Oner.

Mr Oner forwarded the petition on behalf of Homa Bay County residents Collins Okendi, Duncan Ojodeh, Enock Kiche, Jairo Odhiambo, Job Owuor Nyagilo and Daniel Opiyo.

The petitioners have asked the House to investigate the recent restructuring at GDC, examine the recruitment of seven new general managers and look into its failure to deliver 105 mega watts by next month.

The MPs have also been asked to have the Auditor-General carry out a special management audit and a special value for money audit to establish whether the taxpayers’ money spent on GDC has been used well.

MPs were also asked to “make the company concentrate on its core mandate”.

The petition suggests there is discomfort within the GDC over the appointment of seven new general managers and that the restructuring “was undertaken without a strong basis or clear purpose.”

They said they were “concerned that the controversial restructuring was possibly meant to micromanage future operations of the company upon the expiry of the current managing director’s term”.

VALUE FOR MONEY

According to the petitioners, the projected costs indicated in GDC’s revised workplan are questionable “and are not likely to yield value for money due to the taxpayers’ investment.”

Mr Oner said that despite the fact that the petitioners are from Homa Bay County, the issues raised concerned the entire country.

“Everything I have read in that petition is national. The people of Kenya have invested money in GDC. We expect GDC to produce power. If GDC is not producing power many years down the line, are we not entitled to ask, ‘All this money you have used, what is it giving in returns?’” asked the MP.

Endebess MP Robert Pukose supported the petitioners’ request, saying they were within their rights in asking for a review of the investment in geothermal power.

“Their concern is very valid because if the cost of power is lowered, then it means that investors are going to come,” said Dr Pukose.

In March, GDC chief executive Silas Simiyu was put to task by the Public Investments Committee over the manner in which a Chinese firm was given an additional contract in a job worth Sh6 billion.

The matter is yet to be concluded.

Section News    By [JOHN NGIRACHU ]

6/11/2014

Firm signs 25-year deal for supply of power

A consortium led by a TransCentury Limited subsidiary on Thursday entered into an agreement with Kenya Power for the purchase of 35 megawatts of geothermal energy to be generated at Menengai.

OrPower Twenty Two comprises Civicon, a subsidiary of TransCentury, Symbion Power and Ormat Technologies.

It is among three independent power producers that have been tasked with setting up geothermal plants of equal capacity at Menengai. Others are Quantam Power East Africa and Sosian Energy.

This capacity is expected to increase national installed capacity from renewable sources by nearly 10 per cent.

The deal with Kenya Power will last for 25 years and paves the way for the company to start constructing its plant.

OPERATING THE PROJECT

“We are excited to contribute from Ormat’s expertise in geothermal industry in building and operating this project. Upon completion of the Menengai project, more households in Kenya will gain access to cost-effective and clean power from geothermal resources,” Ormat chief executive Isaac Angel said.

Last month, the trio signed agreements with the Geothermal Development Company for the supply of steam.

This followed a Sh1.1 billion partial risk guarantee issued to them by the African Development Bank (AfDB) to protect them in the event that the GDC and Kenya Power fail to honour their obligations.

PARTIAL RISK GUARANTEE

AfDB said the partial risk guarantee would enhance credit to the project and secure cash flows to enable the IPPs to make timely repayments of their debt.

GDC started drilling for steam at Menengai in 2012, and has set a target of an additional 360 megawatts of steam from the field by 2016.

It plans to extract 200 megawatts from Baringo County’s Silali field and another 150 megawatts from the Suswa prospect.

Deal paves the way for Kenya Power to start constructing its plant.

Section Business    By [NATION REPORTER]

3/11/2014

Tender wars halt Jubilee cheap power plans

GDC blames prolonged negotiations for the delay.

The plan by the Geothermal Development Company to add 105MW of steam power to the national grid by December this year will be deferred by a year due to delays in the tendering process.

The Menengai steam power generation project was to begin in December this year after GDC picked three independent power producers, but take-off has been put on hold till November 2015.

The state agency blamed the delay on prolonged negotiations between Kenya Power and Independent Power Producers.

“The delay has been occasioned by the lengthy period it has taken before signing of power purchase agreements,” GDC chairman Faisal Abbas said on Monday in a statement.

In May, the geothermal company picked three firms: Quantum Power, OrPower 4 and Sosian Energy to generate 107 MW under a model where GDC supplied steam while investors were to build power plants.

The delay has also been attributed to the slow pace at which GDC is drilling the steam wells and an apparent inadequate steam in the Menengai region.

The development applies brakes on Jubilee government’s ambitious plans to reduce the cost of electricity in the country by shifting from thermal sources.

 

Section Business    By [NATION CORRESPONDENT]

30/10/2014

GDC signs deal for extra geothermal power

The deals will see the GDC supply steam to three firms.

The Geothermal Development Company on Thursday signed agreements with three independent power producers for generation of electricity at Menengai in Nakuru.

This will add to the existing capacity from the Olkaria fields.

The deals will see the GDC supply steam to the firms, which are, in turn, expected to deliver 105 megawatts of power from the project by the end of next year.

The firms are Quantam Power East Africa, Orpower Twenty Two and Sosian Energy.

Each of the IPPs will construct a 35-megawatt geothermal power plant.

This is expected to increase national installed capacity for generation from renewable sources by 10 per cent.

“This is a major milestone in the history of geothermal energy in Kenya and globally. Today, we have firmed up a new unique model that will see Kenyans enjoying affordable power from geothermal resources,” company chief executive Silas Simiyu said.

It comes a week after the board of directors of the African Development Bank approved a Sh1.1 billion partial risk guarantee for the project.

The guarantee will cover power producers incase GDC and Kenya Power, which is supposed to purchase electricity from the firms, fail to honour their obligations.

Section Business    By [NATION REPORTER]

28/10/2014

AfDB gives Sh1bn cover for Nakuru geothermal wells

Geothermal project set to inject 105 megawatts to the national grid by end of 2015.

A 105 megawatt geothermal project at Menengai is poised for take-off after the African Development Bank (AfDB) approved a Sh1.1 billion ($12.7 million) guarantee.

The partial risk guarantee approved by the bank’s board will cover the project’s financiers and independent power producers, mitigating the risk of non-payment by Kenya Power under the Power Purchase Agreement and non-supply of steam by the Geothermal Development Company (GDC).

Earlier in the year GDC picked Ormat Technologies – through its wholly-owned subsidiary OrPower 4 – Quantum Power and local firm Sosian Energy to each build a 35 megawatt steam power plant under a build-own-operate model.

Construction of the plants is set to start in December. Each of the power plants will cost about Sh4 billion to set up and the electricity will be injected into the national grid by the end of 2015. The guarantee by AfDB will provide comfort to the project’s financiers and could see the independent power producers secure easier borrowing rates.

“This mitigation of perceived political risks will promote foreign direct investment in Kenya and “crowd in” private financing for power generation,” the bank said.

READ: Geothermal overtakes hydro power for first time

The guarantee covers private lenders and investors against the risk of a possible government failure to meet contractual obligations. Were the government to default, the bank would meet these obligations but would also suspend disbursement on all projects it is currently funding in Kenya. The country has borrowed heavily from the bank making such a default risky.

Last year, AfDB also stepped in to provide a Sh2.4 billion guarantee to the Sh71 billion Lake Turkana Wind Project after the World Bank pulled out.

Kenya targets to halve electricity bills next year from present levels of between Sh15-Sh16 per kWh on the back of increased injection of geothermal power to the national grid. Diesel generation costs about Sh30 per kWh while the cost of geothermal power ranges between Sh7.12 and Sh8.01 per KWh, the government says.

Kenya is ranked eighth in the world among the top geothermal producers behind the US, Philippines and Indonesia.
[email protected]

 

Section Business    By [KIARIE NJOROGE]

8/9/2014

200MW power plan in Baringo gathers steam

German state-owned development institution KfW has cleared the Geothermal Development Company to start sourcing for investors to drill up to 20 wells at the Baringo-Silali field.

German state-owned development institution KfW has cleared the Geothermal Development Company to start sourcing for investors to drill up to 20 wells at the Baringo-Silali field.

The project is expected to develop 200 megawatts of geothermal steam which will be sold to independent power producers for generation of electricity.

The project will be financed through a Sh9.6 billion concessional loan from KfW that was signed by The National Treasury in July.

“We received a go-ahead from the financier and the bidding process is going on. We estimate the average output per well will be 5 megawatts,” said GDC spokesperson Ruth Musembi.

The bidding process will close mid this month. Aside from financing drilling, the funds will also be spent on consulting services and feasibility studies.

DROP IN COST

GDC is tasked with producing at least 800 megawatts of steam as its contribution to the ambitious plan by the government to install additional 5,000 megawatts of national power generation capacity by 2016.

Since its inception, the state-owned company has drilled a combined 450 megawatts of geothermal steam from Olkaria and Menengai fields.

Geothermal has been identified by the government as one of the main sources of electricity as it seeks to reduce the cost of power.

Energy cabinet secretary Davis Chirchir has said utilisation of cheap and renewable sources of electricity such as geothermal, wind, coal and natural gas will lead to a drop in the cost of electricity by half.

The current cost is estimated to be about 20 US cents per unit of electricity.

In March, Mr Chirchir led a Kenyan delegation to the World Geothermal Conference held in Manilla, Philippines where it lobbied for the country to be given a chance to host the prestigious event.

“If awarded to Kenya, this will be the first time the congress will be held in Africa. It will positively impact Africa’s geothermal sector.

ERRATIC PRICES

“This bid has been endorsed by government of Kenya and supported by the United Nations Environment Programme and the African Union Commission,” Chirchir told the conference, while announcing a plan to license three new investors to harness the country’s resource.

It is estimated that Kenya has a potential to generate 10,000 megawatts of electricity from geothermal. However, currently, the resource remains underutilised, accounting for less than 500 megawatts of the country’s total installed capacity which is at around 1,700 megawatts.

This month, consumers will not benefit fully from completion of a project to generate 140 megawatts of geothermal power by the Kenya Electricity Generating Company (KenGen) due to continued reliance on thermal generation which is prone to erratic prices of fuel and unreliable exchange rate.

It was expected that the prices of electricity would drop by up to 20 per cent starting this month with the injection of 140 megawatts from the KenGen plant in Olkara into the grid network.

KenGen is expected to add a similar capacity by the end of this year. The Kenya National Bureau of Statistics indicates that the overall inflation rose to 8.36 per cent in August from 7.67 per cent during the previous month, partly on account of increased prices of electricity.

 

Section Smart_Company

6/9/2014

Kenya poised to be a power-sharing hub

ABOUT 3,300MW

“Once you have all that going, it has the capacity of bringing 2,000MW from Ethiopia, 300MW from Lake Turkana, then you have almost 700MW from Ol Karia; and then there is Suswa, which GDC is developing maybe 400-500MW, and the Menengai power plants so you are talking in the region of 3,000-3,500MW of power that will be passing through Suswa,” Mr Mativo said.

Section News    By [JAMES MBUGUA]

10/7/2014

Sh13 billion to power steam energy search

Germany’s development bank has extended to Kenya Sh13.5 billion in loans and grants towards investments in water distribution and geothermal development.

Section Business

24/6/2014

Energy firm boss sees bright future as calm returns to boardroom

After months of fighting over management at the Geothermal Development Company, calm seems to have returned and work ready to start.

After months of fighting over management at the Geothermal Development Company, calm seems to have returned and work ready to start.

The fight, which pitted the board against the management, threatened to derail the operations of the company that is at the centre of the country’s economic growth plans.

GDC will play a major role in realising the country’s goal of producing 5,000MW to boost power supply to industries.

In an interview with Smart Company, GDC’s chief executive officer, Dr Silas Simiyu, said the company is now on course to meet the country’s power deficit that has for years held back industrial expansion.

“We need to be an energy-independent country. That is the only way we can become a progressive society. This is what we will deliver,” he said.

NOT AN EASY TASK

Dr Simiyu’s task at GDC is not an easy one. He is charged with ensuring that the country generates at least 5,000MW from geothermal sources in the next 17 years.

Is he equal to the task? The greatest asset in his toolbox is his more than 25 years of experience in energy generation.

He was instrumental in the establishment of the 35MW Olkaria II power plants and the drilling of 62 wells for the upcoming 280MW Olkaria IV and V power plants.

Fulfilling the ambitious power project will nonetheless not be a walk in the park for Dr Simiyu. One of his challenges was the raging war between the management and the board.

He has been accused of presiding over procurement flaws at the company and ignoring the board in running the company.

DRILLING RIGS

In March, he appeared before a parliamentary committee on public investments to defend a multi-billion-shilling contract the company entered with a Chinese firm, Sichuan Honghua Petroleum Equipment Company Ltd, to supply drilling rigs.

But the 52-year-old CEO sees these as just hurdles in a race he has to complete “for the good of the country.”

“As a leader, you are not going to please everyone. If you stop to chase all the barking dogs, you’ll not reach your destination,” he said.

Currently, Kenya only extracts about 20 per cent of the total 1,300MW power generated from geothermal sources.

The greatest challenge, Dr Simiyu says, is that geothermal generation is highly specialised and capital-intensive. It, therefore, demands special training, which is not available in the country, he added.

A PhD holder in applied geophysics from the University of Texas, Dr Simiyu said the government should invest in the training of more experts in local universities.

LOCAL TRAINING

The GDC boss also has a master of science and a bachelor of science degree in physics and geology from the University of Nairobi, a diploma in geothermal geophysics from the United Nations University in Iceland, and has served as a post-doctoral fellow in seismology at Duke University, USA.

GDC has initiated a local training programme in collaboration with the United Nations University in Iceland, where experts from Africa will be trained.

“All major economies thrive because of abundance of energy. Coal was instrumental in Europe’s industrial revolution. We want geothermal to achieve the same for Kenya,” Simiyu said.

The company, he said, is also setting up a regional training centre in Nakuru to bring up qualified practitioners to guide the country’s journey towards becoming a geothermal powerhouse.

 

Section Smart_Company

6/6/2014

Irrigation plan to fight hunger in Baringo

Hunger in Baringo County could be a thing of the past if a plan to put 57,000 hectares of land under irrigation bears fruit.

Hunger in Baringo County could be a thing of the past if a plan to put 57,000 hectares of land under irrigation bears fruit.

The Geothermal Development Company (GDC) is implementing the project which is expected to end perennial lack of food for over 200,0000 residents.

The project is part of GDC’s plan to generate more than 3,000MW of electricity in the area.

The firm has identified Silale, Paka, Korossi/Chepchuk and areas around lakes Baringo and Bogoria as the potential zones for geothermal development.

GDC managing director Dr Silas Simiyu said the project is key to food security in the area.

He was speaking last week at Loruk, in Baringo after flagging off over 2,000 bags of maize which the energy firm donated to hunger-stricken residents in Tiaty and Baringo North.

Dr Simiyu said the electricity project would create about 1.7 million jobs.

“This will boost food security as it will lead to the establishment of a mega irrigation scheme which can reduce the over-dependence on rain-fed agriculture and support the development of tourist resorts.

This will create employment for 600,000,” said Dr Simiyu adding that the company would continue supporting community projects in the areas where its projects are located.

Revenue

Dr Simiyu said the company has set aside Sh300 billion to generate 800MW in the first phase of the project.

In the second phase, Sh600 billion will be spent.

He said GDC expects to generate about Sh11.5 billion annually from the initiative with 15 per cent of the revenue being channelled to communities within the resource-rich areas.

“The project, which will also see carbon credit valued at over Sh2.9 billion produced, will open Baringo County as an economic hub because the electricity generated will also benefit Turkana County where oil has already been discovered,” said Dr Simiyu.

Present during the event were Baringo Senator Gideon Moi, Tiaty MP Asman Kamama, Women Representative Grace Kiptui and County Assembly Speaker William Kamket.

Mr Cheboi said hunger in the county has been aggravated by rampant cases of insecurity which prevented residents from planting last season.

Mr Cheboi said the devolved government would set aside more than Sh150 million this financial year to put over 50,000 hectares of land under irrigation.

He said the county has received Sh877 million from Japan International Corporation to fund water projects. Under the deal, 70 boreholes will be drilled in the region.

 

Section Smart_Company

 

16/5/2014

Simiyu wins GDC power tussle

In a reshuffle announced Friday, President Kenyatta moved Simon Gicharu to the Rural Electrification Authority (REA) in a similar capacity and replaced him with Faisal Abass, the chairman of REA.

Dr Silas Simiyu has won the battle for the control of Geothermal Development Company that pitted him against his chairman Simon Gicharu.

In a reshuffle announced Friday, President Uhuru Kenyatta moved Mr Gicharu to the Rural Electrification Authority (REA) in a similar capacity and replaced him with Mr Faisal Abass, the chairman of REA.

The two were each handed a one-year contract.

On Friday, reports suggested that Mr Gicharu had been removed in a boardroom coup. Mr Gicharu, the founder of Mt Kenya University, demanded the removal of Mr Simiyu, GDC’s chief executive, accusing him of corruption.

The standoff came barely three months after Mr Gicharu was appointed to head the company on December 27 last year.

In a confidential report sent to the Head of Public Service Joseph Kinyua, Mr Gicharu accuses Mr Simiyu of mismanagement, nepotism and dishonesty. He had demanded GDC be audited in the absence of Mr Simiyu.

TUSSLE OVER TENDER

Mr Gicharu has been embroiled in a tussle with the firm’s CEO over a tender involving the purchase of an electrical rig that was awarded to Sichuan Honghua Petroleum Equipment at Sh2 billion ($21.5m). The anti-corruption commission then started investigations into the parastatal.

GDC gave China Petroleum Technology and Development Corporation an additional job in a contract worth Sh6 billion to put up three rigs after initially winning the tender for two in 2011.

Members of the Public Investments Committee said the deal was contrary to the Public Procurement and Disposal Act, the Public Finance Management Act and the Law of Contract.

However, Mr Simiyu said the procedure was in line with the rules of the African Development Bank, which had given the government the money, part of it disbursed as a loan and the rest as a grant. The government then gave GDC the money as a grant.

POWER SUPPLY STATUS

The shake-up came as Mr Kenyatta directed policy makers in the Ministry of Energy to fast-track new generation and transmission programmes to cut the cost of power.

At a meeting, Cabinet secretary Davis Chirchir led nine parastatal chiefs in the energy sector to give an update on the power supply status and projections for the period of May to September.

When contacted, Mr Gicharu said the work at GDC was still wanting.

“We resolved the issues and issued a joint statement with the CEO. However, I am still not proud of the work output by GDC,” he said by telephone.

Some 140MW of electricity generated from geothermal power will be commissioned in June and the remainder by September.

GDC said it had wells ready for harnessing to generate another 200MW, while a new coal power plant that would generate 960MW at Lamu and the awards for the contract will be done in one month.

“You must ensure the dependency on rainfall for power generation is reduced as much as possible. You must reduce transmission losses,” said the President.

 

Section Business

15/5/2014

Tap steam for more power, says agency

A call has been made to speed up the power purchase plan and stop wastage of steam at the Menengai Crater geothermal wells.

Geothermal Development Company chairman Simon Gicharu said the wells capable of producing close to 100 megawatts should be converted into power and transmitted to the national electricity grid.

Speaking during a tour of GDC offices in Nakuru and the Menengai site, Mr Gicharu said it was unfortunate that the steam was being wastefully spewed into the air, and yet billions of taxpayers’ money has been invested in the project.

NATIONAL GRID

“Our role as GDC is to produce steam, while the relevant departments are supposed to convert it into power and inject it into the national grid for consumption,” he said.

At the same time, he gave GDC management in Central Rift a six -month ultimatum to either sell or forfeit 33 lorries that are lying idle at Menengai.

He said the hauliers valued at Sh400 million were lying idle at the yard while the government was spending millions to move drilling rigs.

 

Section News    By [NATION CORRESPONDENT]

23/4/2014

Now EACC probes Geothermal tender

Detectives sent to inquire into parastatal deal, says Matemu.

The anti-corruption commission has started investigations into claims of irregular procurement at the Geothermal Development Company.

Ethics and Anti-Corruption Commission chairman Mumo Matemu confirmed to the Nation on Wednesday that detectives have been sent to investigate the parastatal.

FROM HOT SPRINGS

The commission’s involvement is the latest twist in a saga that erupted in GDC and has now embroiled Parliament and the Judiciary.

The Public Investments Committee is investigating the procurement of equipment for the generation of power from hot springs.

“Depending on the evidence, we will prosecute those involved with economic crimes,” Mr Matemu said, adding. “At the moment, we cannot tell who is to be prosecuted.”

GDC chairman Simon Gicharu said he was not aware of the EACC investigations. “I have no comment. I am not part of it. As you are aware I am still new in the organisation,” he said.

Mr Gicharu said he was only aware of a case in court in which the board had been cited as one of the respondents.

The chairman could also neither confirm nor deny reports that GDC was operating on a monthly overdraft of Sh850 million.

He referred the Nation to the company’s chief executive.

“The board is not involved in execution or daily operations,” Mr Gicharu said.

It is illegal for a parastatal that is fully funded by the government to have an overdraft as it means it would be spending much more than the approved budget.

GDC director Silas Simiyu could not be reached for comment as his phone went unanswered.

Dr Simiyu has been sued by a lobby group for failing to secure the board’s approval before awarding a tender to the Sichuan Honghua Petroleum Equipment Limited.

UNCONSTITUTIONAL

The Kenyans for Honest Governance Citizens lobby wants to stop payment for the equipment worth Sh1,9 billion on grounds that the agreement was unconstitutional.

Dr Simiyu told Parliament that the African Development Bank, which was funding the project and approved the limited international bidding used in the procurement process, concurred with the decision to give the contract to the firm.

 

Section News    By [LUCAS BARASA]

15/4/2014

Agency boss sued over Sh2bn tender

A director of a parastatal has been sued over a controversial multi-billion tender awarded to a Chinese firm.

In a case certified as urgent at the High Court in Milimani, Geothermal Development Company chief executive Silas Simiyu is accused of irregularly awarding the tender.

The tender revolves around the buying of an electrical rig which was awarded to Sichuan Honghua Petroleum Equipment after it quoted Sh2 billion(US$21.5m).

The petitioners, Mr Ephantus Mbuthia Githae, Mr James Mwangi and the Kenyans for Governance lobby accused the CEO of refusing to “step aside” pending the outcome of an investigation which was triggered by a parliamentary committee.

“By a letter dated January 9 2013 you unconstitutionally, illegally and without any authorisation from the board and the African Development Bank….purported to award the tender to the said Honghua limited…” read the suit papers.

The petitioners argued that the director “materially” misrepresented his ability to award the tender.

They said that the CEO did not seek or obtain the approval of the board when awarding the tender.

“All the awards and resultant contracts were signed by you alone…for and behalf of GDC without the concurrence and signature of any other members of the board of directors,” the petitioners said in affidavits before court.

They cited a document dated December 16 last year between the State corporation and the company in which the contract price is in excess of Sh129 million (US$ 1.5 million).

“Procuring an additional rig unilaterally without prior approval was a reasonable violation of the law and procurement procedure,” the joint affidavit read.

Questioned

The suit papers indicated that in 2011, the agency secured a loan of about US$ 45 million (Sh3.8 billion) from the Africa Development Fund to secure two rigs after agreeing to use limited international bidding tender procedures.

In March 2014, The Public Investments Committee also questioned Dr Simiyu questioned the director over the agency’s procurement of the additional drilling rigs.

He however denied the claims.

 

A director of a parastatal has been sued over a controversial multi-billion tender awarded to a Chinese firm.

Section News

1/4/2014

Geothermal company heads still in hot water

The top management of the Geothermal Development Company will return to the Public Investments Committee (PIC) this week as investigation continues into corruption claims in the company.

At the centre of the dispute is the procurement of three rigs from Chinese firm Sichuan Honghua Petroleum Equipment Ltd (SHPE).

From the presentation to the committee by GDC managing director Silas Simiyu, it emerged that the Chinese firm was awarded a contract to supply three drilling rigs instead of two, as indicated in the tender documents.

MPs, led by vice-chairman Kimani Ichung’wa, questioned the award. SHPE was awarded the tender for the supply of two rigs at Sh3.7 billion ($43.1 million) on 27 November, 2012, then was later allowed to supply an additional rig at Sh1.84 billion ($21.5 million) on 9 January.

Dr Simiyu said the African Development Bank, which was funding the project and approved the limited international bidding used in the procurement process, concurred with the decision to give the additional contract.

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

However, in what could show that the board and the management are not working in tandem, the board chairman, Mr Simon Gicharu said the latter did not follow the laid-down procedures and that the award was issued without the board’s knowledge and approval.

“This procurement may not have met the legal requirements for direct procurement or variation,” Mr Gicharu said in his presentation.He also said that on 16 January, the contract price was varied by an additional Sh129 million ($1.5 million).

Mr Gicharu further said that the “no objection” letter issued by African Development Bank boss Gabriel Negatu came on 28 January, 2013, 19 days after the award of the additional job to SHPE. Some PIC members were not convinced by Dr Simiyu’s explanation that the bank had concurred with the board’s move.

“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 Adan Keynan, the chairman of PIC. He said the arrangement would be contrary to the Public Procurement and Disposal Act, the Public Finance Management Act, and the law of contract.

The MP said because the company awarded the contract for 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.
On 18 March, Dr Simiyu was asked to make better preparations and submit another presentation to PIC after he appeared to contradict himself while under pressure from the MPs.

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

Chris Wamalwa (Kiminini, Ford-Kenya) however suggested that the law allows a firm to be given a supplementary Local Purchase Order on the basis of an existing contract but it was decided the committee would make a decision on that in its in-house meetings.

 

23/3/2014

Senate team appeals for new geothermal funds

A Senate committee has urged the government to adequately fund geothermal exploration to ensure power consumers enjoy lower tariffs.

Section Business    By [NATION REPORTER]

22/3/2014

Geothermal boss get 5 days over tender

The management of the Geothermal Development Company has five days to provide MPs with explanations about its award of an extra tender to a Chinese firm.

Dr Silas Simiyu, the parastatal’s chief executive officer, was ordered to prepare a proper report on the procurement of three rigs after the Public Investments Committee detected inconsistencies in his presentation last Tuesday.

The committee will question the company’s relationship with Sichuan Honghua Petroleum Equipment Company Limited, which initially won a contract to supply two drilling rigs at $43 million but was then awarded a third contract in questionable circumstances.

China Petroleum Technology and Development Corporation, which was initially reported to be the company involved, has since clarified that it wasn’t. Sunday Nation has learnt that it was indeed Sichuan Honghua who were working with GDC.

PIC members are concerned that the third drilling rig, acquired at a cost of $21 million early 2013 was not subjected to competitive bidding, meaning they can’t tell whether it would have cost less.

But Dr Simiyu asserted that the French Development Agency, the project’s financier, was aware of the matter and had given their assent. The allocation, which was made via the government, was $70 million (Sh6 billion).

“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, award three rigs? That’s when the bank gave us an okay,” said Dr Simiyu.

Competitive bidding

But MPs differed, saying that because this was a new contract, it ought to have been subjected to competitive bidding as this created the chance a lower price would be offered.

Chris Wamalwa (Kiminini, Ford-Kenya) was alone in suggesting that because of the circumstances, the law allowed GDC to offer the Chinese firm a supplementary Local Purchase Order.

Committee vice chairman Kimani Ichung’wa, however, said that would be determined when the committee holds its in-house meeting to come up with a decision.

The procurement is also reported to have attracted the attention of the Ethics and Anti-Corruption Commission, which wants to review it and know why the GDC board was not consulted.

Although Dr Simiyu had an explanation ready, he appeared to contradict himself after questioning, first saying that the award of the contract for the three rigs was done at the same time when they realised they have a surplus but later stating that the thrid one was done after the first two.

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

Mr Keynan asked him to meet the committee when he was better prepared with answers. “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, get 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.

22/3/2014

Government to contract more firms in harnessing Kenya’s geothermal stocks

Three new private investors are set to be awarded licences to tap into the vast geothermal resources in Kenya’s Rift Valley.

Energy Cabinet secretary Davis Chirchir told the World Geothermal Conference held in Manilla, Philippines, that Geothermal Development Associates, Quantum Power and Ormat Technologies, are “coming soon”.

Mr Chirchir said two other corporations Schlumberger and Baker Hughes have already set up shop and are providing technical support to fast-track geothermal development.

Mr Chirchir is leading a government bid for Kenya to host the 2020 World Geothermal Congress. The other competitors are Chile, Iceland, Netherlands, Germany, Philippines and USA.

The investors will join Orpower IV, Oserian Development Company and Africa Geothermal International Limited, Marine Power Inc, the existing private prospectors, alongside the state-owned KenGen and the Geothermal Development Company, which are exploiting the resources, at Olkaria and Menengai fields.

Quantum Power of Finland is among bidders that have been short listed in the country to build coal and Liquefied Natural Gas plants as energy policy makers move to attract investment in the country’s extensive geothermal resources.

Ormat Technologies, a US firm, designs, builds, owns and operates geothermal power plants in the United States, Nicaragua, Kenya and Guatemala. As of February 2011, the company had installed a generation capacity of 553 megawatts.

Government is committing a substantial amount of resources into building up its geothermal infrastructure, with investors expected to partner with GDC in upcoming projects at Menengai and Olkaria that are being implemented through Public Private Partnerships. GDC is developing the steam resource at four primary areas Menengai, Bogoria, Silali and Suswa).

The government is also planning on partnering with Independent Power Producers to sell geothermal steam/brine at the plant, for use by the IPPs to convert the resource to energy, through a power conversion contract.

GDC is also evaluating potential joint development agreements with private developers to help develop the new steam fields. The Government is encouraging private development of additional resource areas through concession agreements with private IPPs.

“Investments in geothermal energy guarantees investors significant returns,” said Chirchir, adding that the alternative energy is expected to play a key role in the Government initiative to provide an additional 5,000 MW by December 2016.

Kenya has an installed capacity of 267MW from geothermal sources but seeks to increase its generation capacity.

Largest in the world

At the Olkaria Geothermal Project, a 280MW power plant is under construction and will be commissioned in June this year. This is so far the largest single geothermal development in the world.

“If awarded to Kenya, this will be the first time the congress will be held in Africa; it will positively impact Africa’s geothermal sector. This bid has been endorsed by Government of Kenya and supported by United Nations Environment Programme and the African Union Commission ,” the CS told the conference.

Last month, KenGen tested one of the biggest geothermal wells in Olkaria. The 30MW well, the largest of its kind in Africa. “This discovery underlines the role renewable energy will play in powering Kenya’s development,” said Mr Chirchir.

.

Section Business

18/3/2014

GDC boss in trouble over Sh6b Chinese contract

The CEO 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.

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.

 

Section Politics

6/3/2014

Nakuru banks on steam power to drive economy

Nakuru County is experiencing a boom in geothermal energy exploration and production.

Section Nakuru    By [JAINDI KISERO]

2/2/2014

State in ambitious geothermal power plan in Baringo

The government has announced plans to set up geothermal power plants in Baringo County.

Section Business    By [WYCLIFF KIPSANG ]

29/11/2013

Why lakes in Rift Valley are rising

Water rises alter society physically and socially. For instance, due to the rising of water in Rift Valley lakes, the famous hot springs and jets at Lake Bogoria have subsided. This has had a direct impact on the aesthetics of the area and visitors that fancy this

Section News    By [SILAS SIMIYU [email protected]]

25/11/2013

Firm bets on geothermal to power LAPSSET project

The Lamu Port Southern Sudan-Ethiopia Transport (LAPSSET) Corridor project will consume over 1,000 megawatts of geothermal energy that is expected to be generated in the North Rift region.

Section Smart_Company    By [FRANCIS MUREITHI]

21/10/2013

GDC urges counties to go green

Geothermal firm says regional units have to work with it to realise enhanced expansion.

Section Smart_Company    By [MORAA OBIRIA]

7/10/2013

Firm seeks more power from steam

The Geothermal Development Company (GDC) has invited bids from eligible firms for the supply and installation of three geothermal power plants at Menengai in Nakuru County.

Section Smart_Company    By [FRANCIS MUREITHI]

28/6/2013

Japan seeks to develop Kenya’s geothermal plan

The Japanese want to play a key role in Kenya’s plan to develop 5,000 megawatts of geothermal electricity.

Section Business    By [IMMACULATE KARAMBU [email protected]]

26/5/2013

Geothermal project to get Sh10 billion shot in the arm

The multi-billion Menengai Geothermal project has received a major boost after the World Bank pledged to inject an additional Sh10 billion to speed up the drilling and exploration of the green energy.

Section Smart_Company    By [FRANCIS MUREITHI  [email protected]]

23/4/2013

State, private firm strike deal to develop geothermal plant

The government’s efforts to attract private investors in geothermal production is starting to pay off after Kenya Power inked a 25-year power purchase deal with a firm to construct a 140MW plant in Longonot

Section Smart_Company    By [MWANIKI WAHOME [email protected]]

22/1/2013

Kenya’s hydro-power sources drying up

Kenya’s hydro-power production capacity is about to be exhausted.

Section Smart_Company    By [MWANIKI WAHOME [email protected]]

 

27/8/2012

Firm extends bids for steam power

The Geothermal Development Company (GDC) has extended the closing date for two tenders for development of 800 megawatt steam each at Bogoria and Menengai fields due to the low number of bidders.

Section Smart_Company    By [IMMACULATE KARAMBU [email protected]]

27/7/2012

Experts upbeat over cheaper energy, thanks to 280MW geothermal plant

Energy analysts are upbeat over the recently launched 280 megawatt geothermal power plant, saying it will bring closer the dream of having cheaper electricity locally.

Section Business    By [IMMACULATE KARAMBU [email protected]]

15/7/2012

Energy firm buys Sh5bn rigs from China

Geothermal Development Company has acquired two rigs from China at a cost of Sh5 billion in an effort to speed up drilling of steam wells at the Menengai geothermal project in Nakuru.

Section Business    By [NATION CORRESPONDENT]

1/6/2012

GDC seeks new energy investors

The geothermal Development Company has announced plans to start the second phase of developing

Section Business    By [IMMACULATE KARAMBU [email protected]]

27/3/2012

Kenya steps up search for geothermal power

Kenya is racing to achieve its target of obtaining half of its electricity from geothermal sources by 2018

Section Smart_Company    By [MWANIKI WAHOME [email protected]]

26/1/2012

Geothermal project to receive Sh10 billion funding boost

Plans to set up a 400MW geothermal power generating station at Menengai has received a boost.

Section Business    By [IMMACULATE KARAMBU [email protected]]

8/11/2011

Govt disowns Sh40bn geothermal deal

The government has disowned the controversial Sh40 billion deal allegedly signed with a Chinese firm to drill 80 geothermal wells in the country.

Section News    By [ALPHONCE SHIUNDU [email protected]]

9/8/2011

KISERO: Interrogate credentials of investors

Very big things are happening in the geothermal energy sector. Mega-projects and multi-million dollar contracts are in different stages of being rolled out.

Section Jaindi Kisero    By [JAINDI KISERO]

3/8/2011

Baringo County: Steam power

Baringo is sitting on a resource that experts say will play a key role in propelling Kenya into a golden economic age. For geothermal power is the future. Of Kenya’s estimated 15,000 MW that can be produced from hot springs, up to one fifth of that is available here

Section Counties    By [MUCHEMI WACHIRA]

26/6/2011

Firm floats bids for ‘largest’ geothermal project in Africa

Bids for what could become Africa’s largest geothermal project have been floated by the Geothermal Development Company, and construction of the first phase of four is set to begin January 2012.

Section Business    By [FRANCIS MUREITHI, [email protected]]

15/6/2011

  1. Sudan seeks Kenya support to tap geothermal power

A delegation from South Sudan said the neighbouring state was keen in developing a partnership with Kenya to help it tap its geothermal potential.

Section Business    By [FRANCIS MUREITHI]

12/6/2011

Sh6 billion grant for geothermal power search

Geothermal Development Company receives a Sh6 billion (57 million euros) grant from the French Development Bank (AfD) for the procurement of rigs.

Section Business    By [FRANCIS MUREITHI [email protected]]

29/5/2011

Steam power is our future: Kiraitu

Geothermal power is key to meeting Kenya’s electricity demand, a minister says.

Section Business    By [NATION CORRESPONDENT]

17/5/2011

KISERO: New geothermal well heralds cheap power era

At last, some good news from the energy sector. The State-owned Geothermal Development Company (GDC) last week sank its first successful geothermal well in the Menengai fields. The well has the capacity to run a 10MW electricity plant.

Section Jaindi Kisero    By [JAINDI KISERO]

15/5/2011

Geothermal firm goes full steam

Geothermal Development Company (GDC) has struck a substantial amount of steam energy at Menengai crater which it plans to use in power generation.

Section Business    By [WANJIRU MACHARIA [email protected]]

26/1/2011

New rigs to cut cost of energy production

Increasing direct involvement, including acquiring more drilling rigs

Section Business    By [JOSEPH BONYO [email protected]]

24/10/2010

All set for Kenya geothermal project

Kenya’s high dependency on hydro power and costly diesel-powered generators will ease considerably when the Geothermal Development Company starts the  multi-billion-shilling geothermal steam power generation project on the Menengai Crater in Nakuru.

Section Business    By [FRANCIS MUREITHI  [email protected]             ]

24/10/2010

All set for Kenya geothermal project

Kenya’s high dependency on hydro power and costly diesel-powered generators will ease considerably when the Geothermal Development Company starts the  multi-billion-shilling geothermal steam power generation project on the Menengai Crater in Nakuru.

Section Technology    By [FRANCIS MUREITHI  [email protected]             ]

30/8/2010

Govt ready to get its hands dirty in hunt for oil

Smarting from a devastating setback in what looked to be a definite find of natural gas in Isiolo, the government is adopting a different strategy in its quest for oil.

Section Smart_Company    By [JUSTUS ONDARI [email protected]]

23/6/2010

Use of diesel power to end by December

The government expects to phase out emergency power supply by the end of the year, Energy Minister Kiraitu Murungi has said.

Section Business    By [MACHARIA MWANGI]

 

12/5/2010

The Cutting Edge

Long contracts are not the best way to retain doctors working in government hospitals, says FM.

Section Cutting Edge    By [THE WATCHMAN ]

3/4/2010

No overlap in roles, says power firm

The lending of Sh23.4 billion to power producer KenGen for the construction of a geothermal power plant does not interfere with the role of the Geothermal Development Company (GDC), the parastatal says.

Section Business    By [ JOSEPH BONYO]

15/3/2010

Geothermal power production needs Sh80bn

Kenya will require Sh80 billion to produce 600MW of geothermal power over the next three years as the country seeks for an alternative to the unreliable hydro-power generation.

Section Business    By [WALTER MENYA]

12/2/2010

Geothermal plan steams ahead

Geothermal Development Company will begin drilling steam wells for power generation in Menengai, Nakuru in October.

Section Business    By [SATURDAY NATION Correspondent]

11/1/2010

ERC: New licensing regime in Kenya

Applicants for electricity generation, transmission and distribution will be required to state the clients upfront

Section Smart_Company    By [JOSEPH BONYO ]

11/1/2010

Hope as geothermal drilling begins

Kenya is inching closer to reducing the energy gap following the start of drilling new geothermal wells at Olkaria.

Section Smart_Company    By [KIMEMIA MUGO ]

9/11/2009

Firm to heat up use of steam power

Geothermal Development Company will fast-track the exploration and exploitation of geothermal energy in the country to increase the country’s power output.

Section Business    By [MACHARIA MWANGI]

22/10/2009

Sh383bn to be raised for power

Kenya intends to raise Sh383 billion over the next five years to boost generation, transmission and distribution of electricity.

Section Business    By [JOSEPH BONYO]

21/10/2009

Kenya, France agree Sh12.7bn in energy funding

France has agreed to give Kenya Sh12.7 billion for its energy sector, the office of Kenya’s Prime Minister said on Wednesday.

Section Business    By [REUTERS]

27/7/2009

State’s big return in power business

After listing KPLC and KenGen, the government has created two independent companies to channel its investments in boosting electricity generation and distribution countrywide.

Section Smart_Company    By [WACHIRA KANG’ARU]

22/4/2009

Yes, let’s go geothermal

Though Kenya is regarded as the continental leader in geothermal energy development, progress in this clean power field has lagged behind the potential.

Section Editorials

21/4/2009

Search for more power gains steam

The country’s quest to exploit the hugely untapped geothermal energy potential is finally taking shape as the company expected to spearhead the process starts recruiting staff and organising for its office space.

Section Business    By [JUSTUS ONDARI]

6/3/2009

More cash set for geothermal

The government will increase its financial provision for geothermal power generation in the next budget as it attempts to cope the with increased demand for power.

Section Business    By [MWANIKI WAHOME]

14/2/2009

State moves to set up geothermal unit

The State is set to constitute a technical committee to deal with the working relationship between two power producers after power utility functions are split once more, Energy PS, Patrick Nyoike, told Nation.

Section Business    By [NATION Team]

10/12/2008

The Prime Time Show premiers

A new talk show, The Prime Time Show, has hit television screens. Radio funny man Munene Nyagah has switched from the Easy FM studio to the glare of television cameras as host of the show that aims to reveal the other side of Kenya’s stars.

Section Lifestyle    By [TIM KAMUZU BANDA]

3/4/2007

Unit to shield KenGen from geothermal shocks

New company to take up the risky and costly exploration and well sinking

Section Smart_Company    By [MUNA WAHOME]

25/3/2004

Investors urged to consider the energy industry

The Government yesterday enticed investors to participate in various aspects of electricity generation, where it expects to raise supply from 840 megawatts to 2,600 by 2025.

Section Business    By [NATION Reporter]

 


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