The Auditor-General has raised red flags over the management of the Ksh31.5 billion Menengai Geothermal Project by the Geothermal Development Corporation’s (GDC)
Nancy Gathungu's office questioned why the project’s funds were mixed with those of the company, which is against the Public Finance Management Regulations 2015.
Regulation 76 (1) states that all government entities must open and maintain project accounts with the Central Bank of Kenya - unless exempted by the Cabinet Secretary. Funds are kept in the account whose name must reflect the project’s name.
“However, the project's funds were commingled with funds for the company’s general operations,” said Gathungu in an audit report tabled at the National Assembly on February 20, 2021.
Gathungu further stated that the account was also be overdrawn, which is also a breach of law.
Section 82 (7) of the public finance management regulations not only prohibits overdrawing of government accounts, it also prevents the account from being used to obtain advance or loans for purposes beyond the limit authorized by the National Treasury in line with section 28(4).
Gathungu revealed the breach of law based on the statement of the firm’s financial assets that reflects a balance of Sh562.4 million as borrowings.
The AG further insisted that the corporation’s huge pending bill will adversely affect budgetary provisions for subsequent fiscal years.
Based on the audit report, the project has a pending bill of ksh 418.6 million out of which suppliers are owing the corporation ksh 389.6 million while staff have not been paid ksh 29 million.
On their part, GDC management said the deficits are due to contractual issues and delayed payments from the Kenya Electricity Generating Company (Kengen),
In addition, she revealed total expenditure of Sh2.75 billion against an approved budget of Sh2.37 billion resulted in an over-expenditure of Sh286.9 million. Gathungu explained the expenditure mainly occurred as a result of acquisition of non-financial assets.
The AG’s questions come after GDC recently won a Sh500 million Geothermal Risk Mitigation Facility (GRMF) grant for geothermal exploration from African Union Commission (AUC).
