GDC recovers $14.6m loss due to fraudulent drilling company from bank
GDC now recovered $14.6 million it had lost due to a fraudulent drilling company from the bank that guaranteed an advance payment guarantee. It can now proceed using those funds for further drilling at the Baringo-Silali geothermal project.
In October this year, it was reported that Kenya’s Geothermal Development Company (GDC) had lost Sh1.5 billion ($13.7 milliion) to a Chinese contractor for drilling at the Baringo-Silali project.
Now, news are out that the company actually has recovered the money, and will now proceed with its own drilling after the Chinese company vanished despite being paid the Sh1.5 billion, a 25 per cent advance of the contract sum.
“We will proceed with our own drilling operations. Already there is one rig at the site and we have completed drilling of the two wells. The recovery of the funds will boost our operations in the region,” GDC boss Johnson Nchoe in a statement.
Nchoe said that Stanbic Bank, the guarantor, was compelled to refund the cash to after Hong Kong Offshore Oil Services Limited failed to do the job.
The tender was advertised in 2014 and the Chinese firm handed the award notification on 10 November that year.
“Stanbic bank had provided the Advance Payment Guarantee for Chinese Hong Kong Offshore Oil Services (HOOSL) in favour of GDC,” read a statement from GDC.
The Chinese firm was contracted to drill 15-20 geothermal wells in Bogorua-Silali in Baringo. But no wells had been drilled by this year.
From the story, it seems the Chinese company fraudulently played all parties involved to receive an advance payment guarantee. 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.
“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.