Economy

NSSF plot owners to foot Sh5bn roads bill

tassia

A flat in Tassia estate. A court has ruled that each plot owner pays Sh920,000 to the National Social Security Fund for infrastructure upgrade. PHOTO | FILE

Property owners in Nairobi’s controversial Tassia Estate on Thursday suffered a major blow after the High court dismissed their attempt to block the National Social Security Fund (NSSF) from asking them to pay for the planned Sh5 billion roads construction.

Justice Weldon Korir ruled that the plot owners had, when buying the plots, agreed to meet the cost of infrastructure once approved by the county government.

The decision clears the way for NSSF to have the property owners pay for the Sh5 billion upgrade.

“Had NSSF proceeded to use its funds for the project, it would have acted outside its statutory mandate. Money for infrastructure development and services has to come from buyers of the plots,” Justice Korir ruled.

The plot owners are aggrieved by NSSF’s decision to impose a Sh920,000 fee per owner to finance development of the infrastructure.

The plot owners had further claimed that the NSSF breached the contract it had agreed with them when it increased the prices of the plots.

The owners had told the court that each 33x66-foot plot was priced at Sh315,000 and a 100x50-foot piece at Sh800,000 but NSSF had increased the price to Sh550,000 and 1.2 million respectively.

They further questioned the award of the tender to build the infrastructure to China Jiangxi International at a cost of Sh5 billion, claiming they were not consulted and that the contract was awarded irregularly.

READ: Kambi defends NSSF over Sh5bn Tassia project

The judge noted that documents produced in court showed the petitioners had agreed to the increase in prices, pointing to the extension by the NSSF of the payment period they had asked for.

Justice Korir said this was evidence that they agreed to pay the enhanced price and could not thereafter turn around and accuse the NSSF of arbitrarily increasing the prices.

The petitioners challenge of award of the contract to China Jiangxi International was also dismissed on grounds that such an award of tenders should be challenged under mechanisms provided for in the Public Procurement and Disposal Act.

NSSF told the court that the majority of the 4,708 cash purchasers of the plots had failed to pay up as agreed making it necessary to adjust the price upwards and in some instances repossess the plots for sale to willing third parties.

NSSF termed the petition a backdoor appeal against award of the tender to China Jiangxi and asked the court to reject it as it would amount to deciding a procurement matter outside the established mechanism.

Justice Korir said China Jiangxi was not party to the suit and it would be unfair to make any adverse findings about the tender awarded to it without hearing the company out.

The judge also rejected the petitioners’ claim that the price of the tender was inflated noting that while the NSSF had clearly explained how it arrived at a figure of Sh5.035 billion, the plot owners did not place before court a better price.

The judge while dismissing the case directed the petitioners to foot the legal costs that the NSSF incurred while defending the case.

NSSF’s planned infrastructure upgrade includes a 90.4km tarmac road and lighting. The roads are to be fitted with culverts and storm water drainage system. 

Labour secretary Kazungu Kambi suspended China Jianxi International’s tender following public protests over its award. He said the suspension was to allow the Ethics and Anti-Corruption Commission to investigate the tendering process.

Day later, Mr Kambi admitted before a parliamentary committee that he had overstepped his mandate in suspending the Sh5.053 billion infrastructure upgrade but still insisted he had acted in the public interest.

He said no money has been paid to China Jiangxi because the money was to come from plot owners who were yet to contribute.

Investigations by Parliament’s Public Investments Committee revealed that the NSSF had lost more than Sh500 million in previous tender awards to the Chinese firm through bid price variations over a five year period.

Parliament also found that the NSSF had signed a deal with a contractor when it did not have funds earmarked for the upgrade. This is against Section 30(4) of the Public Procurement and Disposal Act.

NSS managing trustee Richard Lang’at told Parliament early this year that the plot owners are willing to finance the project except a few who are occupying land earmarked for public utilities such as roads and sewer lines.

Release of titles to the owners is pegged on the infrastructure development.

NSSF had claimed in court document that City Hall has made infrastructure development a precondition for the final approval, which will pave way for subdivision and issuance of tittles.

The Tassia estate controversy started when Central Organisation of Trade Unions secretary general Francis Atwoli questioned variation of the contract cost from the initial Sh3.3 billion to Sh5 billion.