- Two firms were awarded tender to expand JKIA but work was terminated in 2016 for alleged lack of funds.
- KAA boss Johnny Andersen maintains they won’t pay the demanded amount as the tender was void.
Image: FILE
Kenyans may be forced to pay Sh17.6 billion to a Chinese contractor following missteps by the government and Kenya Airports Authority officials in the execution of a tender at JKIA.
The demand was made by Anhui Construction Engineering Group, which was executing works on the Greenfield Terminal in a joint venture with China Aero-Technology International Engineering Corporation.
The two firms were to construct a passenger terminal, taxiways and remote parking bays at the Jomo Kenyatta International Airport.
The project, whose site grass has overgrown, was to cost Sh56 billion but construction was terminated in March 2016 for lack of cash.
At the time of termination, KAA had paid Sh4.3 billion to the contractor as well as expended other millions in preparatory works for the groundbreaking.
In the demand notice signed by Mu Yunqing, the JKIA site agent, the firm seeks Sh2 billion being for contract bill of quantities, Sh2.3 billion in extra costs claims and Sh708 million VAT.
The entity is further demanding Sh500 million interest and penalties for delayed payment of VAT to KRA and Sh5.6 billion for works already executed in the design/build tender.
But the current KAA management led by MD Johnny Andersen has maintained that it won’t pay the stated amounts insisting that the tender was void.
“We are presently waiting for direction from the Ministry of Transport regarding the way forward on deliberations and subsequent negotiations with the contractor,” Andersen said.
The Public Investments Committee chaired by Mvita MP Abdulswamad Nassir yesterday grilled KAA officials, for the second day, on the matter.
Big names in ex-President Mwai Kibaki’s administration among them former Head of Civil Service Francis Kimemia, Transport minister Amos Kimunya (currently Kipipiri MP) and Attorney General Githu Muigai were mentioned in the controversial tender.
Nassir said those named will appear before the committee to answer to queries touching on their role in the costly tender.
Also to be invited is former KAA acting MD Lucy Mbugua – whose name appears in a number of queries - the tender committee that invalidated the contract and the DCI and EACC as friends of PIC.
During the session, MPs sought answers on why the tender cost was varied to include Sh10 billion, being VAT which was initially not part of the contract.
This was included after the first contract was voided and an amended one – now under President Uhuru Kenyatta’s administration - approved by Mbugua, acting company secretary Victor Arika and PS Nduva Muli.
The contract was to be exempt from the VAT charge, raising questions about the motivation behind the change which would have seen Kenyans cough the extra cash.
“Why did Lucy Mbugua sign a letter justifying a wrongdoing? What was the extra Sh10 billion for yet the original contract had no VAT clause?
“The authors of this contract knew what they were doing and by design changed the word ‘exclusive’ to ‘inclusive’ to justify the wrong VAT charge,” Nassir said.
Other concerns are on the inconsistencies on the part of former AG Githu Muigai having earlier advised against the termination, only to change mind after the contract was amended.
The amendment was to factor the upward variation caused by VAT, albeit it saw the contract net bid price fall from the initial Sh64 billion to Sh56 billion.
Nassir said: “This is a well-orchestrated fraud since no works appeared to have been done yet billions of shillings were paid out. We are likely to recommend prosecution of those involved.”
The remarks followed revelations that the first contract has no seal and was only signed by one official on behalf of KAA yet the amended contract posited that the contract was duly executed.
Also shocking was that the no bank had entered a financing agreement with KAA by the time the two contracts were signed.
More worrying is that Sh75 million was paid for groundbreaking which was held in December 2013 yet the payments were made in 2012.
MPs, describing the tendering process as a Mexican soap opera, said it defeats logic that some monies were spent yet there was no substantive progress in the works.
Furthermore, the contractor hired a project supervisor – Louis Berger - at Sh5.1 billion, whose cost was passed to taxpayers.
But it is worth noting that the KAA board was warned against executing the contract but the ex-managing director Stephen Gichuki, in defiance of the board, went ahead to implement it.
The first warning shot was fired by the defunct Prime Minister’s office in 2011 where PS Cyrus Njiru (Transport) and Mohamed Isahakiah (OPM) advised KAA against the project.