- The unnamed Chinese financier was to fund the project at 85 per cent in an Export Credit Agreement, with the rest to be funded by taxpayers.
- The budgetary provision is among the Sh55 billion which Cofek chief Stephen Mutoro has petitioned Parliament to probe.
Image: EZEKIEL AMING'A
A multibillion-shilling hospital under construction by the Kenya Defence Forces is at risk of stalling after the primary financier pulled out.
Fresh details show that the project could be in shambles as the Defence ministry has exhausted its locally available budget for the venture.
Defence Principal Secretary Patrick Mariru said there was no plan at the moment of how the Sh19 billion facility would be completed after the Chinese financier withdrew.
“We are looking for a financier to meet the rest of the Sh19 billion. It is an issue on the table as we are still far from completion,” Mariru said.
“What is on the table is to ask ourselves what it is we do with this huge project. We'll make decisions on what are our options around that. What do we do with this project within the shrunk fiscal space? Do we go PPP (public private partnerships)? Those are the main issues so that realise the full value of this venture.”
The unnamed Chinese financier was to fund the project at 85 per cent in an Export Credit Agreement, with the rest to be funded by taxpayers.
The PS explained to the Public Petitions Committee, which is probing sunset expenditures by the previous administration, that the financier pulled out following a policy change in China.
China, he said, took a policy position that they wouldn’t fund defence projects in other countries, hence affecting the works which were at 25 per cent completion.
In this regard, the Defence ministry approached the National Treasury, which provided Sh2.2 billion in the first supplementary budget approved by MPs recently.
The budgetary provision is among the Sh55 billion which Cofek chief executive Stephen Mutoro has petitioned Parliament to probe, saying the Uhuru Kenyatta team did not secure proper approvals of the same.
The Petitions Committee chaired by Kitui East MP Nimrod Mbai thus invited the Defence team to explain the circumstances under which the payments amounted to an emergency - the main justification for supplementary budgets.
Cofek alleged that there was immense pressure for the money to be sent to the ministry for paying for the works at the hospital, and further claimed there was a special relationship between ministry bosses and the contractor.
But Mariru said the claims were untrue as the ministry needed the money to avert exposure in terms of penalties and interests from pending bills.
He told the committee on Tuesday that the contractor had drawn certificates of completion to the tune of Sh2.9 billion whose payments were outstanding.
“The emergency followed after the financier withdrew. The ministry thought there was subsequent exposure of the ministry over the unpaid certificates of Sh2.9 billion,” the PS said.
“They (Chinese) withdrew. We didn't budget. We did a requisition for funding and the National Treasury gave us the Sh2.2 billion which was paid. The money was approved by Parliament.”
This was even as the Defence ministry raised concerns that it may have spent at source part of the proceeds from which the budget was raised.
Mariru said the money was part of Sh3.1 billion proceeds from the lease of frequencies initially used by the security apparatus.
In 2020, then-President Kenyatta directed the formation of the National Security Telecommunication Service to provide one frequency for the security apparatus.
From the sale, Sh2.2 billion was wired to the exchequer and the joint telecommunications agency retained the rest – about Sh900 million.
But among questions MPs posed were why the ministry sought to use the money before depositing it to the Consolidated Fund Services.
They also sought to know why the ministry opted for a supplementary budget instead of waiting for the next budget.