Taxpayers risk losing billions in stalled projects

Wise planning? Viable projects? Value for Money?

Taxpayers are likely to sink billions of shillings into repayment of debts for non-viable projects undertaken by the government, some without due diligence.

A number of these multi-billion projects run the risk of stalling in the wake of struggles by the National Treasury to secure funding for their completion. Some already are stalled.

In a report on stalled projects, the Treasury said the ventures need more than Sh290 billion to complete for use.

The JKIA Greenfield Terminal, Galana Kulalu Irrigation scheme, the Laptops project and the Medical Equipment Scheme are but a few.

Already, a Chinese contractor wants Sh17 billion in payment for ‘work not done’ at the Greenfield Terminal project. Another firm it hired for supervisory works is owed Sh5 billion. The Anhui Construction Engineering Group made the demand last November for the botched contract, which was executed in a joint venture with China Aero-Technology International Engineering Corporation.

The two firms were to construct passenger terminals, taxiways and remote parking bays at  Jomo Kenyatta International Airport. The contract was terminated for lack of viability.

The Public Investments Committee is currently probing contractual flaws, in which many key state officers played a part, inflating the Sh56 billion project’s cost.

Also of concern is President Uhuru Kenyatta’s food security flagship project at Galana Kulalu, where the state paid Sh5.9 billion to an Israeli firm, with no returns. The Sh7.2 billion model farm has stalled after Green Arava — the contractor — walked away from the site. The National Irrigation Board has planted maize on the farms.

The government will sink a further Sh8.4 billion into the controversial laptop-cum-tablet project (tablets for pupils, laptops for teachers), which so far gobbled up more than Sh50 billion.

Auditor General Edward Ouko had disclosed that the state could not account for Sh15.2 billion that had been pumped into the much-touted digital learning project.

The initiative was allocated Sh17.6 billion, Sh13.4 billion, Sh13.4 billion, and Sh6.3 billion in four financial years since 2015, with virtually no impact, the audit team said.

At least 10 airport projects rolled out by the Ministry of Transport and valued in total at Sh66 billion had been approved in June 2018. They have stalled.

They include civil works on the Nanyuki Airstrip, rehabilitation of Wajir Airport, Tseikuru Airstrip; Voi Ikanga Airstrip, Wagadud Airstrip and Wilson Airport.

IRRIGATION AND DAMS

In the Irrigation sector, the government rolled out ambitious dam projects in Nakuru and Elgeyo Markwet counties, which are now facing funding shortages. 

Works on Itare, Kimwarer, and Arror dams — which were to be undertaken by Italian firm CMC di Ravenna — have stalled, worse, the contractor has declared bankruptcy.

In early March, Director of Public Prosecutions Noordin Haji called the extent of the Sh21 billion dams scandal "shocking" and promised arrests.

The contract award for Itare was Sh38 billion, Arror Dam (Sh38 billion) and Kimwarer Dam (Sh28 billion) with authorities now fearing that a cancellation would result in costly arbitration.

Apart from the mega dams, Parliament in February recommended the cancellation of 22 dam projects valued at Sh188 billion.

Environment committee chairman and Maara MP Kareke Mbiuki said Kenyans are not assured of value for money in the projects, adding that the contractual arrangement has turned into a cash cow for entrepreneurs.

The dams are Kamumu, Rupingazi, Thambana — all in Embu; Meru’s Kithino, Maara and Thingitu; Pesi, Kinja in Nyandarua; Kahurura, Winyumiririe and Isiolo in Laikipia; Karemeno (Nyeri) and Londiani (Kericho). Others are Maragua IV (Murang'a), Bute (Wajir), Bosto (Bomet), and Gatei (Kiambu).

The common factor in most of the abandoned projects is that most of them were rushed and, therefore, executed without due consideration of their viability and availability of cash to complete.

Of especially note is the case of the JKIA Greenfield Terminal; the tender was cancelled despite warnings at the onset that there was no money to complete it and there were questions about its viability.

Before the tender was awarded to the Anhui firm in 2011, former Prime Minister Raila Odinga cautioned Kenya Airports Authority against proceeding with the procurement process.

Apart from the airport venture, the State Department of Public Works has also halted Sh4.8 billion works, citing budget constraints.

Construction of the Migori District headquarters, Kabarnet Medical Training Centre, Kibish police station, Nakuru Industrial Training Institute and Mathare Nyayo Hospital have been stalled.

Then there's the stalled works on Mitihani House Phase V, which needs Sh334 million, five years after the set completion date.

The Treasury also reported that 37 courthouses have stalled and about Sh2 billion is needed to complete them.

The Senate, in resolutions read by Elgeyo Marakwet Senator Kipchumba Murkomen at the Third Legislative Summit, said the state should prioritise the completion of stalled development projects before undertaking or funding new ones.

HEALTHCARE

As for leasing Sh38 billion specialised medical equipment to the counties, a committee chaired by Bungoma Senator Moses Wetang’ula will review the programme's viability.

Its mandate is to determine whether counties, which have since rejected the Sh6.2 billion allocated to the venture, are getting value for money from the national government's scheme.

Council of Governors and Kakamega county boss Wycliffe Oparanya said they were not brought on board during signing of the agreements between the suppliers and the national government in 2015.

He asked counties not to accept cuts in their budgets to fund the project, which has seen the devolved units pay Sh200 million annually — some even before receiving the machines and having no trained staff.

Governors say the leasing project is being 'forced down [our] throats'.