LOSS-MAKING PROJECT

Kiunjuri to decide future of Israeli contractor in Galana Kulalu

CS says the contract can be terminated through arbitration or through a mutual agreement

In Summary

• The state has spent Sh5.9 billion and is now threatening to terminate a contract with Green Avara company. 

• 3,000 acres to be under maize by end of this month at a cost of Sh45,000 per care.  

Galana Kulalu
Galana Kulalu
Image: Courtesy

The Sh7.2 billion Galana Kulalu food security project has been in the news lately for all the wrong reasons.

But Agriculture CS Mwangi Kiunjuri says Kenyans should not give up on the project just yet. He visited the area on Friday last week. 

Today, he will decide whether Green Avara, the Israeli company that was in charge of the maize plantations, will continue with the work.

There have been disagreements between Green Arava and the Department of Irrigation through the National Irrigation Board. Kiunjuri has summoned the contractor for a meeting in his office today at Kilimo House, Nairobi.

In May last year, the site was flooded following downpours and some pumps were submerged. River Galana changed its course. 

In August, NIB requested the contractor to rehabilitate the river but it declined.

Kiunjuri said when the contractor was asked to do repairs, he brought in a bill of Sh700 million.

“In a very short distance, the contractor was asking for Sh700 million, yet NIB has spent Sh38 million to bring the water back. Today, irrigation is going on and there is a crop in the model farm,” he said.

Kiunjuri said there had been a dispute between the contractor and the government over rehabilitation.

“And because there was no insurance, we did not know who should take charge, the government or the contractor. This is one of the issues that we will be discussing,” the CS said.

Engineer Charles Muasya, the project manager, said because work and production had to continue, they hired a local contractor to do the repairs. He said that was allowed even though they had a binding contract with the Israeli firm.

A fortnight ago, Kiunjuri held a meeting with officers from NIB, the Office of the Attorney General, the National Treasury and the Presidential Delivery Unit. A committee was formed to look into the project's problems. It presented its report to the CS last week.

Kiunjuri said the team went on a fact-finding mission on the ground and "and with the findings, I'm now able to call the contractor". He explained that the contract can be terminated through arbitration or through a mutual agreement.

“However, the report was not clear on who owes who and this has been the bone of contention. I have summoned the contractor so he can give his side of the story. I also want to give them a fair hearing so we can decide whether to terminate the contract or not,” he said.

NIB had decided to start terminating the contract and had taken full charge of the project.

The irrigation project was started in 2012 and was supposed to take 18 months. By then, the project was estimated to cost Sh14 billion, which was later reduced to Sh7.2 billion.

So far, the government has spent Sh5.9 billion in the farm and insurance worth Sh800 million has been paid out. 

Kiunjuri said they are looking at all sides. He said the contractor is owed Sh1.2 billion. “We are assessing the work that has been done and what has not been done.”

The report also pointed out the issue of production. Kiunjuri said for every one acre, the contractor was spending Sh90,000 — including fuel costs. It was clear that Galana Kulalu was a loss making venture.

“This was becoming expensive and we were making losses. Today, the crop is at the tussling stage and we have spent Sh45,000. This tells you there will be a profit of over 40 per cent. We will be spending half of what the contractor was spending,” the CS said.

He said maize harvesting will be done in the coming two months, and the expected harvest is 32 bags per acre. Some 1,000 acres have been farmed and by July, another 2,000 acres will be under maize to make a total of 3,000 acres.

Kiunjuri said by December, 5, 000 acres will be irrigated and by February 2020, the entire 10,000 acres should be covered. This is expected to create more than 1,000 jobs.

“For now, tough decisions must be made either way. I have only this week to have a decision on the way forward. Whether the contractor should go on, or if NIB should allow the contractor to finish the works remaining which should be done in less than seven months,” Kiunjuri said.

(Edited by F'Orieny)