EIB to audit GDC’s Sh428m funding use
The European Investment Bank (EIB) is planning to audit how the Geothermal Development Company (GDC) spent the €2.71 million (Sh427.6 million) subsidy it received for the exploration and development of geothermal resources.
GDC received the money from EIB and its co-financiers AFD, KfW, JICA and the World Bank when it was funding Kenya Electricity Generating Company (KenGen) in the expansion of the Olkaria geothermal steam field.
EIB says it is looking for an external auditor to review how GDC received the amount that was delivered in two tranches—€1.63 million (Sh257.1 million) and €1.08 million (Sh170.5 million) in 2020 and 2021 respectively.
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“As part of its monitoring procedures before project completion, it is the intention of the EIB to review the subsidy utilisation by hiring an auditor to conduct a review of the GDC account and to report the factual findings resulting from the agreed-upon procedures in relation to the subsidy,” says EIB in tender documents.
“The objective of this expenditure verification is to confirm that the expenditure reported by the beneficiary (GDC) has occurred, is accurate and eligible and to submit the report with regard to the agreed-upon procedures performed.”
GDC received the subsidy to enable further geothermal development in the country in line with the Cotonou Agreement on investment and private sector development.
The funding came in when EIB and other development partners were financing KenGen to extend the existing Olkaria I station by two 70 MW units (units IV and V) and implementing two 70 MW units at the Olkaria Domes field (Olkaria IV power station).
GDC was required to use the subsidy to finance the exploration and development of geothermal resources in Kenya including surface exploration and initial drilling.
Kenya through the World Bank Energy Sector Management Assistance Program (ESMAP) has developed a national geothermal strategy to identify the means by which to develop 2,936 MW of additional geothermal capacity by 2035.
GDC is a wholly State-owned corporation that was established in 2008 to serve as a vehicle for driving the accelerated development of geothermal resources in Kenya
According to the national power development master plan, geothermal power has been identified as the least-cost alternative base-load power for Kenya.
Read: KenGen ordered to pay GDC Sh3.9bn
GDC is tasked with the management of Olkaria I and II steam fields and the sale of steam to KenGen.
The company has 59 wells with a cumulative capacity of about 412 MW. The company earns revenue of approximately Sh3 billion annually from steam sales in Olkaria. BY BUSINESS DAILY
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