Don’t ar­bi­trate, Geother­mal told, as it could cost tax­pay­ers Sh1bn

Geother­mal firm ter­mi­nated a con­tract with a clear­ing and for­ward­ing com­pany, which in­voiced it Sh1 bil­lion for loss of rev­enue when the ten­der was stopped

The Star (Kenya) - - Politics Parliament - JAMES MBAKA @onchir­im­baka

Leg­is­la­tors yes­ter­day warned the Geother­mal De­vel­op­ment Com­pany against ac­cept­ing ar­bi­tra­tion with a con­trac­tor, say­ing the out­come could cost tax­pay­ers Sh1 bil­lion.

The Pub­lic In­vest­ment Com­mit­tee told GDC man­age­ment that ar­bi­trat­ing with Bon­fide Clear­ing and For­ward­ing Com­pany Lim­ited over ter­mi­na­tion of a Sh1.7 bil­lion ten­der was not a vi­able op­tion.

The cor­po­ra­tion of­fered Bon­fide a con­tract in 2012 to move geother­mal rigs and other equip­ment in 40 lots, each cost­ing Sh42 mil­lion.

The rigs were to be moved within as dis­tance of 11km, bring­ing the to­tal cost to a Sh1.7 bil­lion.

Yes­ter­day, GDC man­ag­ing di­rec­tor Johnson ole Nchoe told the watch­dog com­mit­tee he com­pany, which was awarded the con­tract, has in­voiced GDC for Sh1 bil­lion in lost rev­enue.

GDC had de­cided to ter­mi­nate the con­tract on Septem­ber 13, but Bon­fide con­tested the de­ci­sion and de­manded pay­ment for the work done by the date the con­tract was ter­mi­nated.

Nchoe said GDC’s po­si­tion was that there were no out­stand­ing pay­ments owed to the con­trac­tor fol­low­ing the ter­mi­na­tion of the ten­der. How­ever, Bon­fide sub­mit­ted two in­voices for pend­ing pay­ments, cit­ing mo­bil­i­sa­tion and de­mo­bil­i­sa­tion costs.

The ini­tial in­voice, he said, was Sh13.4 mil­lion, while the sec­ond one was Sh1 bil­lion — a com­pu­ta­tion for loss of rev­enue for the re­main­ing 24 moves.

In seek­ing to get ‘ir­reg­u­lar’ pay­ments, the con­trac­tor has gone ahead to have the mat­ter re­ferred to a sin­gle ar­bi­tra­tor. MPs warned this could be a scheme in which tax­pay­ers would lose a lot of money.

“The con­tract had no pro­vi­sion for mo­bil­i­sa­tion or de­mo­bil­i­sa­tion as in­voiced by the con­trac­tor. Pay­ment was pro­vided for a com­plete move,” Nchoe said. “The com­pu­ta­tion of loss of rev­enue can­not be sup­ported as the con­trac­tor did not pro­vide the ser­vices and GDC had the right to ter­mi­nate the con­tract.”

GDC said it has in­vited the com­pany for dis­cus­sion in an at­tempt to re­solve the dis­pute am­i­ca­bly. It said it feared pro­tracted and costly court bat­tles.

“We have said we don’t ac­cept any li­a­bil­ity, but we have called the meet­ing in good faith be­cause we don’t want to go the court route and then the con­trac­tor turns around say­ing, ‘I was not given a fair hear­ing,” Nchoe said.


Kikuyu MP Ki­mani Ichung’wa, Limuru MP John Ki­ragu and Geother­mal De­vel­op­ment Com­pany CEO Johnson ole Nchoe at Par­lia­ment Build­ings yes­ter­day /

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