Chinese developer says it lost Sh2bn in war with Kempinski

Chinese developer Avic International claims it has lost Sh1.8 billion in construction delays arising from the vicious battle that ensued between it and luxurious Villa Rosa Kempinski hotel, which is opposed to the planned construction of a rival 43-storey facility in an adjacent plot.

Avic says that an appeal Kempinski filed before the environmental watchdog (Nema) tribunal saw it lose Sh20 million for each of the 93 days that construction stalled awaiting the ruling.

Kempinski in September challenged the National Environment Management Authority’s (Nema’s) decision to award Avic approvals for its Sh9 billion complex leading to a freeze in construction work for the entire period of the proceedings as provided for by law.

Kempinski last week opened the second round of the battle with an appeal against the Nema Tribunal’s decision to dismiss its case.

The tribunal threw out the case on grounds that it was filed outside the 60-day window following the award of an approval. The hotel has filed a suit in the Environment and Lands Division of the High Court, seeking to overturn the tribunal’s decision.

Avic, however, argues that further delays to the multi-billion shilling project will cost it more money without the hope of recovery.

“Avic had made financial commitments to the project including earthwork, which have been lying idle. We, as a result, suffered a loss of Sh20 million a day which we have no hopes of recovering,” the firm says in response to Kempinski’s suit.

The Chinese company on December 18 got the go-ahead to continue construction after the Nema tribunal dismissed Kempinski’s case.

Avic began construction work after it obtained Nema’s approvals for the 250,000 square metres project in July last year.

Kempinski moved to the tribunal in September, arguing that it was within time as its appeal was filed less than 30 days of learning that Nema had approved Avic’s construction plans.

READ: Kempinski blocks building of rival China firm’s hotel

The Nema tribunal ruled that Kempinski should have first sought an extension of time from the Nema Tribunal to lodge the appeal as is stated in the Nema Act.

“It is the tribunal’s position that Kempinski ought to have approached it first by way of an application for extension of time under permissive provisions of the law. An appeal filed out of time without compliance with the applicable rules for extension of time even where a party had ample time to do so is a nullity,” the Nema tribunal ruled.

Kempinski says construction of Avic’s facility has hived off part of Chiromo Lane Road and is bound to increase traffic in the area, a move that will make it harder to access its top notch facility, especially during rush hours.

The tribunal’s decision has set the stage for a titanic battle between Kempinski, which has exclusively enjoyed the prime location since 2013, and Avic, which seeks to make its entry into Kenya’s hospitality industry with the new hotel.

The two rival establishments will be barely 20 metres apart upon completion of Avic’s hotel.

The complex, which includes a 43-floor office block and four apartment blocks, will double as Avic’s Africa headquarters. Two of the apartment blocks will have 24 storeys, while the other two will have 25 and 28 floors respectively.

The complex is located between ARM Cement headquarters, Kempinski and Mirage Towers. Avic bought five parcels of prime land totaling 7.5 acres for the project.

Kempinski, which is one of Nairobi’s premier hotels, in September got an order from the Nema tribunal stopping construction of the complex until its appeal is determined.

The hotel, which is owned by the family of billionaire businessman Adil Popat, moved to the tribunal through its parent company-Simba Corporation.

Kempinski reckons that Nema granted Avic an Environmental Impact Assessment (EIA) licence before concerns it raised about the multi-billion shilling complex were addressed.

Kempinski further contends that Nema granted the EIA licence to Avic on the assumption that all five parcels of land will be amalgamated into one, but Kempinski says Avic’s land is separated by a public road – Chiromo Lane – making it impossible to amalgamate the entire property under one title deed.

Under the law, parcels of land separated by public utilities such as roads cannot be merged under one title.

Documents Kempinski filed before that tribunal show that it wrote to Nema, the Ministry of Environment and Natural Resources, National Land Commission, Kenya Power, Nairobi Governor Evans Kidero and various roads authorities raising questions on the proposed construction, in vain.

It says Avic has not explained how it plans to deal with noise pollution, storm water drainage and air quality during construction. Avic objected to the appeal, arguing that Kempinski challenged its Nema approvals out of time.

Avic plans to build its high-end hotel on the northern part of the land, which also opens up to Chiromo Road. Its facility, however, will be more than three times bigger than the 10-floor Villa Rosa Kempinski.