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November 14, 2018

Why Sh56 billion JKIA Greenfield Terminal project collapsed

Construction equipments at the site where greenfield terminal is supposed to be when fully completed in 2017.Photo/Charles Kimani
Construction equipments at the site where greenfield terminal is supposed to be when fully completed in 2017.Photo/Charles Kimani

The contractor for the bungled Sh56 billion Greenfield Terminal airport project failed to secure funds leading to its collapse, the Star has established.

Kenya Airports Authority management officially terminated the project yesterday, ending Kenya’s dream of having the largest terminal in Africa.

KAA board yesterday said Chinese firm – Anhui Construction Company – was supposed to secure $600 million (Sh60.9 billion under current exchange rate) before the project started at Nairobi’s Jomo Kenyatta International Airport.

Bidders for the tender were to submit a letter of intent to finance the project from a reputable financier.

Anhui which presented two institutions – China Exim Bank and China Development Bank – however, failed to secure the funds.

“The agreement was that whoever wins the contract was to give a sovereign guarantee that they can secure funds for the project.

Finances were, however, not secured so the project could not kick off,” KAA chairman David Kimaiyo said on phone.

In a statement, acting MD Yatich Kangugo cited prevailing operational, economic and financial dynamics in the aviation industry, which have been on a downward trend over the last three years, as reasons for termination of the project.

The project was to be completed by next year. 

The board, which held an unusual sitting on the evening of Easter Monday, had already stopped payments to Anhui, according to a source.

The company is said to have withdrawn $4 million (Sh405.9 million) from KAA before the project took off, after it moved to site on September 14, 2013.

Kimaiyo said investigations are underway to establish if any payments were made.

He dismissed concerns that Kenyans risk losing an estimated Sh15 billion over the decision to end the contract.

“In terms of compensation the law will be followed. Even the contractor may pay the government,” Kimaiyo said.

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