•The committee established that out of the total purchase price of Sh570 million, the county will spend another Sh100 million as a cost of reconfiguring the building.
•The committee says the cost of construction of office block should not exceed Sh500 million in line with the existing resolution made by the Senate.
Image: FILE
A Senate committee has ordered the Uasin Gishu government to stop the planned purchase of the Sh570 million National Bank of Kenya building in Eldoret town.
The Finance and Budget committee chaired by Kirinyaga senator Charles Kibiru termed the deal too costly to the taxpayer.
Instead, the panel wants the county to construct an office block that will cater for its space needs on many of its available parcels of land in the town.
The county had earmarked the NBK building for purchase to provide office spaces for executive staff.
But the committee said the building is dilapidated, uninhabited and neglected, adding that the total cost of renovations and configuration would be higher than the cost of construction of a new office block.
“The County should stop any process initiated on the transactions meant to acquire the building and construct an office block in one of the parcels which are under its ownership,” reads the report tabled by Kibiru on Tuesday.
The committee established that out of the total purchase price of Sh570 million, the county will spend another Sh100 million as a cost of reconfiguring the building.
The committee says the cost of construction of office block should not exceed Sh500 million in line with the existing resolution made by the Senate.
Even though the transaction started in 2015, the County is yet to make any payment with regard to purchase of the property.
The sale agreement provides that the Sh570 million was to be paid in two instalments of Sh300 million and Sh270 million, respectively.
However, the county opposed the move and petitioned the Senate through their Senator Margret Kamar saying the purchase was not conducted in a fair, equitable, transparent, competitive manner.
The petitioners argued that the quoted price was exorbitant and the procurement method was not acceptable.
But the county said it carried out due diligence in October 2018 and valued the building at Sh568 million but that the negotiating team settled on Sh570 million as the purchase price without clear reasons for the increase in the price.
The residents argue in their petition that the building is in a poor state and that no worthy reason has been given as to why other county properties have been overlooked for the same use intended for the building.
They argued that renovation and development of other county properties offer better value for money and that such options ought to have been pursued, that a feasibility study was not carried out and that there is no evidence of competitive sourcing which would have involved a bid for purchase by the County Government.
The residents claimed the office demand for the county was about 9,419 sq. metres. The NBK building has an office space of about 4,560 sq. metres.
Part of the deal of the acquisition was that NBK would lease back about 2,200 sq. metres from the same building once it changes hands.
In justifying the purchase, Governor Jackson Mandago told the committee that the county departments and offices are housed in different locations within Eldoret town and this hampers service delivery given that service points are not in a central location.
He said the issue of constraint of office space has been experienced for a while and the Office of the Controller of Budget in one of its reports had made recommendations that county to put mechanism in place to stop the continuous payments of rent.
The County had unsuccessfully bided for the building when its sale was advertised but the Bank turned to the county when all the bidders failed the evaluation.
It quoted Sh661 million for the property but the county valuer gave the value of the property as Sh568 million out of which the value of land was Sh450 Million and that of building as Sh118 Million.
The extra cost of Sh2 million which was above the actual cost were to cater for incidental and related costs in the transaction process.
“The costs associated with these repairs would be equivalent to construction of new office block and it may take another couple of months before its ready for occupation since a lot of works are required to make it suitable for usage as offices,” the report states.
The committee further notes that the acquisition of the building may not meet help the county meet the demand for office space for the county executive because after renovation, the building has a space of about 4000 square metres.