The Geothermal Development Company (GDC) is on the spot after an audit flagged Sh15.93 billion in drilling rigs that are either idle or non-functional, adding to a list of underutilised assets at the government-owned firm.
In the latest report for the year ended June 2025, the Auditor-General has questioned the value for money of the seven drilling rigs acquired several years ago, noting that three have remained out of operation for the past five years with no clear repair plan, while GDC also lacks staff capacity to operate all the rigs.
“Review of documents provided by management in respect to the operating condition of the rigs revealed that three rigs were not in good working condition,” the report states.
The rigs have the capacity to drill up to seven kilometres, with GDC describing them as “some of the most powerful in Africa.”
GDC management says three rigs were spoiled due to vandalism of cables, obsolete parts, missing critical components and breakdown of service parts over a period of five years.
“Management indicated that the company lacked sufficient budget to repair the rigs as well as limited human capital to operate all the seven rigs. In the circumstances, value for money spent on acquisition of the seven rigs amounting to Sh15.93 billion could not be confirmed,” reads the audit report.
The audit also flagged GDC’s failure to insure the multi-billion-shilling equipment, exposing it to significant financial risk. However, in response, GDC said it was undertaking a risk survey before procuring insurance.
“The company is in the process of undertaking a risk survey on its assets for insurance purposes. The company will also benchmark with the sector counterparts for best practices,” said GDC in response to audit queries.
The audit findings on the drilling rigs form part of underutilised or idle assets at the State-owned firm tasked with exploring and drilling for geothermal steam in the country.
The report further revealed inefficiencies in supporting the drilling equipment, including bulk cementing trucks used in drilling operations.
Of the 12 trucks acquired in 2016 at Sh138.9 million, eight were found to be non-functional and had not been used since purchase.
Concerns were also raised over a stalled drilling monitoring software project initially contracted in 2014 at a cost of Sh344.5 million. The system was meant to provide real-time monitoring of drilling operations, including fleet management and CCTV integration across rigs.
However, audit verification in September last year revealed that the software had not been installed despite an advance payment of Sh137.8 million.
“Although management indicated that milestone one on fleet management had been achieved, no evidence was provided in support of the claim,” the auditor-general said.
GDC told auditors that the matter is under investigation by the Ethics and Anti-Corruption Commission (EACC), but noted that efforts to obtain progress updates have not yielded feedback.
“In the circumstances, value for money incurred drilling monitoring software totaling to Sh137.8 million could not be ascertained,” the report adds.
The year ended June 2025 saw GDC’s pre-tax loss widen to Sh1.46 billion from a loss of Sh528.2 million in the previous financial year.
However, a tax credit of Sh1.82 billion saw it post a net profit of Sh352.02 million compared to a net profit of Sh1.72 billion in the previous financial year when it enjoyed a Sh2.25 billion tax credit.
GDC was formed in 2008 as a special purpose vehicle following the enactment of the Energy Act 2006, that allowed the dividing of the country’s energy sector into five sub-sectors namely generation, transmission, distribution, regulation and policy.
The firm develops steam fields and sells geothermal steam for electricity generation to Kenya Electricity Generating Company and private investors.
