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Exposed: How Kenya lost Sh1.4b to China company : The Standard

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A Geothermal development Company steam well in Menengai, Nakuru County.

In yet another brazen act of disdain for the Kenyan taxpayer, a foreign contractor has pocketed Sh1.4 billion advance payment and left a parastatal in the energy sector high and dry, gasping for breath.

It is a familiar story; contractor plucked from faraway lands, signs up an externally funded multi-billion shilling project, painfully obtains an advance payment guarantee from a bank, gets paid a quarter of contract price, bizarrely recalls the guarantee, delays to mobilise for works, contract expires and taxpayer is left with a festering fiscal wound.
It is the story of Hong Kong Offshore Oil Services Limited (HOOSL), a company contracted by Geothermal Development Company (GDC) to drill 15 to 20 geothermal wells in Bogoria-Silali in Baringo in April 2016.
Advance payment
Three years later in 2019, GDC has nothing to show for the billions sunk in so far except frustrations, to the point of writing panicky letters to the Attorney General and Governor of Central Bank of Kenya as reality dawns that they may have been played.
A report prepared for GDC board by George Muya, General Manager, Strategy peels layers of a possible fraud involving a local bank and in which the Sh1.4 billion advance payment guarantee was recalled just after payment had been issued and the bank affirmed it.
The tell-tale signs were there from the very start. According to the report, just two months after the contract was signed, on June 17, 2016, the contractor wrote to GDC requesting the advance payment but also pleading to be allowed to offer a guarantee from an insurance company rather than a bank.
GDC rejected the request on July 8, 2016 and three months later on October 6, wrote to HOOSL asking them to submit the payment guarantee within 30 days.
“HOOSL responded to this letter on October 8, 2016 by informing GDC that they are working on the issuance of the guarantee with a local bank. Subsequently, on October 20, 2016, HOOSL sought an extension of the timeline for submission of the guarantee by additional 60 days,” the report says.
GDC went on to accept this extension which was to lapse on December 20, 2016. A few days to the deadline, however, HOOSL wrote again to seek further extension by two months; that is up to February 20, 2017. The company again agreed but marked it as the final extension.
It had no clue what awaited it.
February came and passed, no guarantee. Instead the company sought additional extension but GDC was not going to budge. A stalemate ensued until June 2, 2017 when, out of scope, the contractor submitted the advance payment guarantee of USD 14,629,952 from the bank and which was to expire on December 1, 2018.
Shortly thereafter, the bank confirmed the guarantee and GDC proceeded to facilitate the processing of payment through the Ministry of Energy and National Treasury. “The advance payment was paid out to HOOSL in September 2017 which HOOSL confirmed receipt on September 25, 2017,” report says.
Three month notice
With money already with the Chinese, GDC proceeded to issue the contractor with a three month notice to mobilise starting on January 15, 2018. Mobilise meant transportation of the rigs- the massive machines that do the actual drilling into the earth’s subsurface-  from China to Baringo for start of drilling operations.
Instead of going on an overdrive to deliver the machinery, HOOSL simply confirmed receipt of the notice and proposed a meeting with GDC in China to discuss the rig mobilisation and amendment of the contract. Soon thereafter, it pulled a shocker.
“On March 9, 2018, HOOSL rejected the issued notice to mobilise stating that it was not validly issued,” the report says. Apparently, HOOSL had relied on a slight breach by GDC which required designated representatives to act on behalf each of the parties to the contract. In the breach, the CEO of GDC had issued notice of mobilisation instead of the appointed representative, Stephen Kangogo.
The company corrected itself and issued a fresh notice through their designated representative on March 20, 2018. Six days later, HOOSL was up again with another hold-up; they wrote to GDC saying the rigs which it had hoped to mobilise were no longer available.
These are the rigs the GDC had inspected prior to signing the contract as part of due diligence. In the new twist to the story, HOOSL wanted to be allowed to use substitute rigs which they claimed to be similar to the ones inspected but which GDC had not seen.
They also wanted GDC to hire some components of the alternate rigs for them. Again GDC rejected the proposal on April 19, 2018. Soon thereafter on June 23, the notice to mobilise expired without a machine from the Chinese on site. Three days after the expiry of the notice, GDC wrote to the bank which had issued the guarantee seeking payback of the moneys advanced.
“The bank, in an informal meeting, claimed that HOOSL had written to it stating that there was mutual consent with GDC to have the guarantee recalled, which position is false and amounts to misrepresentation and fraud as GDC, the beneficiary of the guarantee, did not in any way authorise the recalling,” the report adds.
The report says GDC met with HOOSL on August 8, 2018 and made it clear that the contract would not go on before its monies were reinstated. The Chinese on the other hand stated they would not manage to reimburse the monies.
In the confusion, GDC reluctantly agreed to use of alternate rigs subject to another round of due diligence on them and with the hope it may solve the standoff. Again, HOOSL threw spanner in the works when they refused to fund the due diligence they had occasioned.
“The proposal for use of substitute rigs is HOOSL’s proposal hence HOOSL should meet the cost. HOOSL is categorical that they will not meet the cost of the due diligence as it is a requirement by GDC that inspection of rigs be undertaken before mobilisation to the project site,” the report adds.
An impasse ensued following which the financier, KfW, a German state-owned development bank decided to break the ice and fund the doggone trip to China. They too, had no clue what awaited them. As GDC was preparing to dispatch two inspectors to China, HOOSL wrote a letter informing the company that one of the rigs was not available for inspection.
As GDC absorbed the shock, the Chinese wrote another letter on November 1, 2018 asking the company to proceed for due diligence of the remaining rig within the next 9 days otherwise it would be rigged down — disabled — after that.
Tired of the cat-and-mouse games, GDC wrote to HOOSL on November 16, 2018 giving them 14 days to remedy their default in mobilisation. Two days earlier, GDC had written the last of its series of letter to the local bank asking it to pay up the guarantee.
Fifteen days later on December 1, 2018, the payment guarantee expired and with it the hopes of recouping the money. Meanwhile in Baringo, the auxiliary drilling machinery GDC had assembled for the big project remained parked for years in the yard. Kenyans were, once again, left Sh1.4 billion poorer.
Out attempts at contacting the Chinese company fell flat as the Chinese phone number provided on the website did not go through.
The company does not have an email address on its website. It however provides a fax number for communication.

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Public officers above 58 years and with pre-existing conditions told to work from home: The Standard

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Head of Public Service Joseph Kinyua. [File, Standard]
In a document from Head of Public Service, Joseph Kinyua new measure have been outlined to curb the bulging spread of covid-19. Public officers with underlying health conditions and those who are over 58 years -a group that experts have classified as most vulnerable to the virus will be required to execute their duties from home.

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However, the new rule excluded personnel in the security sector and other critical and essential services.
“All State and public officers with pre-existing medical conditions and/or aged 58 years and above serving in CSG5 (job group ‘S’) and below or their equivalents should forthwith work from home,” read the document,” read the document.
To ensure that those working from home deliver, the Public Service directs that there be clear assignments and targets tasked for the period designated and a clear reporting line to monitor and review work done.
SEE ALSO: Thinking inside the cardboard box for post-lockdown work stations
Others measures outlined in the document include the provision of personal protective equipment to staff, provision of sanitizers and access to washing facilities fitted with soap and water, temperature checks for all staff and clients entering public offices regular fumigation of office premises and vehicles and minimizing of visitors except by prior appointments.
Officers who contract the virus and come back to work after quarantine or isolation period will be required to follow specific directives such as obtaining clearance from the isolation facility certified by the designated persons indicating that the public officer is free and safe from Covid-19. The officer will also be required to stay away from duty station for a period of seven days after the date of medical certification.
“The period a public officer spends in quarantine or isolation due to Covid-19, shall be treated as sick leave and shall be subject to the Provisions of the Human Resource Policy and procedures Manual for the Public Service(May,2016),” read the document.
The service has also made discrimination and stigmatization an offence and has guaranteed those affected with the virus to receive adequate access to mental health and psychosocial supported offered by the government.
The new directives targeting the Public Services come at a time when Kenyans have increasingly shown lack of strict observance of the issued guidelines even as the number of positive Covid-19 cases skyrocket to 13,771 and leaving 238 dead as of today.
SEE ALSO: Working from home could be blessing in disguise for persons with disabilities
Principal Secretaries/ Accounting Officers will be personally responsible for effective enforcement and compliance of the current guidelines and any future directives issued to mitigate the spread of Covid-19.

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Uhuru convenes summit to review rising Covid-19 cases: The Standard

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President Uhuru Kenyatta (pictured) will on Friday, July 24, meet governors following the ballooning Covid-19 infections in recent days.
The session will among other things review the efficacy of the containment measures in place and review the impact of the phased easing of the restrictions, State House said in a statement.
This story is being updated.
SEE ALSO: Sakaja resigns from Covid-19 Senate committee, in court tomorrow

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Drastic life changes affecting mental health

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Kenya has been ranked 6th among African countries with the highest cases of depression, this has triggered anxiety by the World Health Organization (WHO), with 1.9 million people suffering from a form of mental conditions such as depression, substance abuse.

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Globally, one in four people is affected by mental or neurological disorders at some point in their lives, this is according to the WHO.

Currently, around 450 million people suffer from such conditions, placing mental disorders among the leading causes of ill-health and disability worldwide.

The pandemic has also been known to cause significant distress, mostly affecting the state of one’s mental well-being.

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With the spread of the COVID-19 pandemic attributed to the novel Coronavirus disease, millions have been affected globally with over 14 million infections and half a million deaths as to date. This has brought about uncertainty coupled with difficult situations, including job loss and the risk of contracting the deadly virus.

In Kenya the first Coronavirus case was reported in Nairobi by the Ministry of Health on the 12th March 2020.  It was not until the government put in place precautionary measures including a curfew and lockdown (the latter having being lifted) due to an increase in the number of infections that people began feeling its effect both economically and socially.

A study by Dr. Habil Otanga,  a Lecturer at the University of Nairobi, Department of Psychology says  that such measures can in turn lead to surge in mental related illnesses including depression, feelings of confusion, anger and fear, and even substance abuse. It also brings with it a sense of boredom, loneliness, anger, isolation and frustration. In the post-quarantine/isolation period, loss of employment due to the depressed economy and the stigma around the disease are also likely to lead to mental health problems.

The Kenya National Bureau of Statistics (KNBS) states that at least 300,000 Kenyans have lost their jobs due to the Coronavirus pandemic between the period of January and March this year.

KNBC noted that the number of employed Kenyans plunged to 17.8 million as of March from 18.1 million people as compared to last year in December. The Report states that the unemployment rate in Kenya stands at 13.7 per cent as of March this year while it stood 12.4 per cent in December 2019.

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Mama T (not her real name) is among millions of Kenyans who have been affected by containment measures put in place to curb the spread of the virus, either by losing their source of income or having to work under tough guidelines put in place by the MOH.

As young mother and an event organizer, she has found it hard to explain to her children why they cannot go to school or socialize freely with their peers as before.

“Sometimes it gets difficult as they do not understand what is happening due to their age, this at times becomes hard on me as they often think I am punishing them,”

Her contract was put on hold as no event or public gatherings can take place due to the pandemic. This has brought other challenges along with it, as she has to find means of fending for her family expenditures that including rent and food.

“I often wake up in the middle of the night with worries about my next move as the pandemic does not exhibit any signs of easing up,” she says. She adds that she has been forced to sort for manual jobs to keep her family afloat.

Ms. Mary Wahome, a Counseling Psychologist and Programs Director at ‘The Reason to Hope,’ in Karen, Nairobi says that such kind of drastic life changes have an adverse effect on one’s mental status including their family members and if not addressed early can lead to depression among other issues.

“We have had cases of people indulging in substance abuse to deal with the uncertainty and stress brought about by the pandemic, this in turn leads to dependence and also domestic abuse,”

Sam Njoroge , a waiter at a local hotel in Kiambu, has found himself indulging in substance abuse due to challenges he is facing after the hotel he was working in was closed down as it has not yet met the standards required by the MOH to open.

“My day starts at 6am where I go to a local pub, here I can get a drink for as little as Sh30, It makes me suppress the frustration I feel.” he says.

Sam is among the many who have found themselves in the same predicament and resulted to substance abuse finding ways to beat strict measures put in place by the government on the sale of alcohol so as to cope.

Mary says, situations like Sam’s are dangerous and if not addressed early can lead to serious complications, including addiction and dependency, violent behavior and also early death due to health complications.

She has, however, lauded the government for encouraging mental wellness and also launching the Psychological First Aid (PFA) guide in the wake of the virus putting emphasis on the three action principal of look, listen and link. “When we follow this it will be easy to identify an individual in distress and also offer assistance”.

Mary has urged anyone feeling the weight of the virus taking a toll on them not to hesitate but look for someone to talk to.

“You should not only seek help from a specialist but also talk to a friend, let them know what you are undergoing and how you feel, this will help ease their emotional stress and also find ways of dealing with the situation they are facing,” She added

Mary continued to stress on the need to perform frequent body exercises as a form of stress relief, reading and also taking advantage of this unfortunate COVID-19 period to engage in hobbies and talent development.

“Let people take this as an opportunity to kip fit, get in touch with one’s inner self and  also engage in   reading that would  help expand their knowledge.

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