Workers risk losing Sh215m in stalled housing venture

Workers risk losing more than Sh215 million of their retirement savings in a stalled housing scheme in Nairobi, the Auditor-General has warned.

Auditor-General Edward Ouko says in a report that work on the National Social Security Fund’s (NSSF) Nyayo Embakasi Phase Six housing project has come to a halt due to lack of approvals by the county government.

The NSSF had already released partial payment to the Chinese contractor.

“The NSSF is at risk of losing the Sh215.54 million already paid and additional losses on delayed completion of the project,” says Mr Ouko, who issued a qualified opinion on NSSF’s latest books of accounts to June 2015. “The main reason for the stoppage of the works was due to failure by Nairobi County to grant relevant approvals to enable construction.”

A qualified opinion means there are gaps in book-keeping, hence not providing a true picture of the scheme.

Chinese firm China Jiangxi is said to have already left the construction site, having built only 52 units out of the planned 324 mix of apartments and maisonettes that were to cost a total of Sh2.15 billion.

Mr Ouko says the advance payment was wired to the contractor against a bank guarantee, which expired on September 30, 2015.

The multi-billion shilling real estate project has also fallen behind schedule given that contract documents show the scheme was to break ground in June 2013 and be completed in November 2014.

The completed units were to be sold at the rate of Sh5.5 million for one bedroom apartments and Sh12.5 million for three-bedroomed maisonettes.

Nyayo Estate Embakasi is strategically located about 18 kilometres from Nairobi city centre.

NSSF acting managing trustee Anthony Omerikwa said the State-run pension scheme has given up on the project gone sour.

“NSSF has no intention to continue with any other construction works in Nyayo Embakasi,” he said in response to the Business Daily queries.

He added that the NSSF only paid for the work done as valued by project architects Symbion International and quantity surveyors Davson & Ward Ltd.

The botched deal is the latest NSSF housing project to be hit by headwinds.

The upgrade of Hazina Trade Centre in Nairobi to 39 floors from the current three has also stalled after an audit established that the building’s columns cannot support the additional structures.

The retirement scheme also risks losing Sh115 million in a phony land deal for a prime plot located in Nairobi’s Upper Hill district whose title deed has been revoked, according to an audit report.

Other queries raised by the Auditor-General relate to collecting Sh748 million from unknown contributors and wasteful spending that saw the NSSF use half of workers’ contributions for administration.

The NSSF’s bulging waistline saw returns to pensioners shrink to an all-time low of three per cent last year from 12.5 per cent in 2014.