This archive report was first published on 23 December 2019.
Published on December 23, 2019, a deal between Geothermal Development Company (GDC) and Hong Kong Offshore Oil Services (HOOS) has left Stanbic Bank with a KSh1.4 billion loss.
The deal, which was struck in 2014, involved HOOS drilling 15-20 geothermal wells in Bogorua-Silali in Baringo. However, by 2019, no wells had been drilled.
Stanbic Bank had stepped in as the guarantor, offering KSh1.4 billion (25% of the contract sum) to HOOS. However, after HOOS failed to accomplish the task, Stanbic was forced to refund the cash.
According to GDC, HOOS requested an advance payment two months after signing the contract in 2016. Later in 2017, the firm submitted an advance payment guarantee of KSh1.4 billion from Stanbic bank, which expired in December 2018.
Despite the guarantee, HOOS confirmed receipt of the money in September 2017, but failed to drill any wells. This led GDC to enforce a refund from Stanbic, resulting in a KSh1.4 billion loss for the bank.
