Auditor-General Nancy Gathungu has raised concerns over Geothermal Development Corporation's (GDC) Ksh31.5 billion Menengal geothermal power project.
She stated that the project's finances were banked contrary to provisions of the Public Finance Management Act 2015.
In an audit report tabled before parliament on February 20, 2021, for the year ended June 30, 2020, Gathungu noted that the project's funds were mixed with those of the company, subverting provisions on disbursement.
File image of the Menengai geothermal power project. |Photo| Courtesy|
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Regulation 76 (1) requires that all projects have a separate account with the Central Bank of Kenya (CBK) unless and otherwise permitted by the Cabinet Secretary. The name of the account must reflect the respective project.
"However, the project funds were commingled with funds for the company's general operations," Gathungu noted, adding that GDC was yet to separate the accounts.
She also highlighted that the account had been overdrawn contrary to Section 82 of the Public Finance Management Act which prohibits government accounts from being overdrawn.
The Act further prohibits the use of the account to acquire advances or loans for purposes not allowed for by the National Treasury.
"In the circumstance, the project management was in breach of the law," Gathungu stated.
She highlighted that the firm's accounts at the Cooperative Bank of Kenya showed a balance of Ksh562.4 million listed as borrowings.
Gathungu highlighted that the project had huge pending bills totaling Ksh418.6 million. 389.6 million is owed to suppliers while Ksh29 million owed to staff in terms of salaries.
She stated that comparative budgetary receipts total to Ksh2.47 billion against actual receipts of Ksh1.68 billion. This translates to a budgetary deficit of Ksh784.6 million.
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