- MPs query why the government has never evacuated power from the well, which GDC completed more than 10 years ago
- The GDC also flagged for treating income from steam revenues as grants, a move MPs said amounted to an attempt to evade taxes
Image: EZEKIEL AMING'A
A House team has convened a roundtable with top guns in the Energy and Treasury ministries to discuss, among others, unutilised electricity in the country.
The meeting will discuss a finding that steam wells with a capacity of 300 megawatts of electricity are lying idle at GDC.
The National Assembly’s Public Investments Committee on Energy slated the meeting for next Thursday.
PIC chairman David Pkosing revealed the plan when he met officials of the state-run geothermal company.
The officials had appeared before MPs on audit queries.
The question by MPs is why the government has never evacuated power from the well, which GDC completed more than 10 years ago.
“The country’s peak demand for power is 2,200 megawatts yet here we are leaving almost a third of the demand remaining idle. Why has this well taken this long to be developed?” Pkosing asked.
GDC officials said their hands were tied on how to go about the well, as their mandate ends with drilling to extract steam.
After completing the wells, GDC said it is expected to enter into arrangements with Kenya Electricity Generation Company (Kengen) to develop the facilities and sell the power to KPLC.
Auditor General Nancy Gathungu flagged the situation in an audit of the year to June 30, 2021.
She said the wells, which cost Sh815 million, had been completed but were not in use as of the time of the audit review.
There were also other projects (wells) to the tune of Sh751 million whose values remained unchanged over the years and hence were judged as stalled.
Disclosures by the company on the matter were not sufficient, hence the audit query that PIC is investigating.
Treasury CS John Mbadi and his Energy counterpart Opiyo Wandayi are among the top government officials Parliament has invited to the roundtable.
Also expected are representatives of the Auditor General, Treasury PS Chris Kiptoo, his Energy counterpart Alex Wachira, KRA commissioner general Humphrey Wattanga, GDC CEO Paul Ngugi, Kenya Power MP Joseph Siror and Kengen boss Peter Njenga.
The roundtable would also delve into an outstanding tax row between GDC and the Kenya Revenue Authority.
In the row, KRA claims that GDC earned revenue from the sale of steam but had declined to remit the requisite taxes.
The 2019 audit indicated there were unpaid taxes totalling Sh4 billion that had accrued from the 2015 to 2019 financial year.
A change in the company accounting policy on steam charges revenue in the year ending June 2020, reduced the outstanding tax and related penalties by Sh2.5 billion, to Sh197.8 million.
The balance had not been agreed with the Kenya Revenue Authority as of June 30, 2021, leaving the tax balances unconfirmed.
It also emerged that GDC has been treating income from steam revenues as grants, a move MPs said amounted to an attempt to evade taxes.
During the year ending June 2020, GDC posted close to Sh2 billion from steam revenues - as capital grants.
“Where did the money, Sh1.9 billion, come from? Treasury? World Bank? Do you want to run away from tax?” Laikipia East MP Mwangi Kiunjuri asked.
“It should be made clear how they are converting it into a grant. For how long will it remain a grant?”
Ngugi, in response, said, “When GDC was formed, it was assigned 59 wells and the revenue was to be seed money for funding GDC operations and investment.”
“Once the money has come in, it is appropriated through Parliament. We are earning the money and the same is allocated to development and pays taxes. We have escalated the matter to the National Treasury,” he stated.
Aldai MP Maryanne Kitany also raised tax-evasion concerns.
“GDC wants to evade tax. Whether the well was donated or they did it, they charged wananchi through Kenya Power or whoever. They are trying to beat about the bush and are keen to evade tax,” Kitany said.
Kaloleni’s Paul Katana demanded to know how the Sh1.9 billion became a grant.
Pkosing said there was a need for GDC to prove the money was revolving and was already attached to a well.
“The National Treasury must demonstrate that out of the wells, they are a grant,” the Pokot South MP said.