Geothermal Development Company has no money to pay salaries on time, Union says

Heated greenhouses at the Geothermal Development Company (GDC) Direct Use Pilot project at its Menengai base in Nakuru

Heated greenhouses at the Geothermal Development Company (GDC) Direct Use Pilot project at its Menengai base in Nakuru County on October 26, 2021. 

Photo credit: Francis Mureithi | Nation Media Group

Operations at Geothermal Development Company (GDC) is in a bad state mainly on liquidity constraints in a move which has seen the state corporation default on servicing its key obligation such as remittance of statutory deductions.

The Kenya Electrical Trades and Allied Workers’ Union (Ketawu) whose members are drawn from the state corporation says the state corporation is on its deathbed, a situation that saw it also default on the payment of workers’ salaries mainly towards the end of last year. 

The sorry state of GDC financially, Ketawu says has resulted in the non-remittance of membership fees to its employees attached to the workers union to the tune of Sh2 million to date.

GDC has also not remitted statutory deductions to the National Hospital Insurance Fund (NHIF) and National Social Security Fund (NSSF) amounting to Sh1.8 billion from September last year.

The state corporation, mandated to execute surface geothermal development, including prospects for drilling, has been unable to meet its financial obligations partly because their accounts have been frozen by the Kenya Revenue Authority (KRA) over non-remittance of taxes. 

The amount it owes KRA together with interest is to the tune of Sh6 billion to date, said Ketawu.

“Ketawu notes that GDC is on its death bed hence the Government needs to move with speed to rescue it,” Ernest Nadome, Ketawu secretary-general, told Nation.Africa yesterday.

“GDC's future is very bleak at the moment and our members have extensive uncertainty and are extremely worried on the financial situation of the company in the foreseeable future.”

Disputed claims

Wanjiru Kangara, Manager, Corporate Communications and Marketing at GDC has however disputed the claims, saying that normal operations are going on at the firm though on a reduced scale as GDC continues to address the cash-related matters.

GDC, she said has lodged a complaint to KRA on issues of tax and interest accrued and is waiting for a meeting with them with a view to arriving at an amicable solution.

“There are no salary arrears. KETAWU has written to us, and we will respond to them. The situation is being handled in the government circles and in the court machinery,” she said.

The new revelations by the workers union are coming at a time the High Court has blocked an Information and Communication Technology (ICT) company from seizing funds held in an account at NCBA bank over a Sh2 billion debt arising from the provision of maintenance services at Menengai Geothermal Project.

High Court judge Dorah Chepkwony allowed the application by the Attorney General after hearing that the bank account holds a loan of €80 million (Sh10.9 billion) meant for the exploration of steam field development in Bogoria.

Attorney General said the bank account was specifically opened by Geothermal Development Company (GDC) to receive the funds in an agreement dated July 10, 2014, financing the project by Kreditanstalt Fur Wiederaufbau (KFW) of Germany.

The court heard that allowing the ICT firm, Lantech (Africa) Limited, to seize the money might spark a crisis between the governments of Kenya and Germany because the funds were meant for a specific project.

In a ruling last month, the court had allowed the application for garnishee orders against NCBA Bank, Co-operative Bank and KCB Bank of Kenya ltd, directing the banks to hand over any money belonging to GDC to Lantench.

The firm has been seeking payment of Sh2 billion it was awarded by the arbitrator, Kyalo Mbobu, arising from a contract for the provision of maintenance services.

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