Chinese firm beats Kenyan developer to NSSF tower deal
The NSSF complex will be an extension of this building housing a Nakumatt branch. It will cost Sh6.7 billion. FILE
What you need to know:
Jiangxi International wins contract to build 39-storey trade centre.
A Chinese firm beat Kenyan developers to a multi-billion-shilling contract for the building of Nairobi’s tallest office block. The 39-storey National Social Security Fund (NSSF) owned Hazina Trade Centre will be built by China Jiangxi International.
The Chinese firm had disputed award of the contract to Cementers Ltd, a Kenyan real estate developer that initially won the lucrative deal.
“This project has previously been dogged by a number of false starts due to attendant legal hurdles, which I am glad have now been overcome,” said Labour Cabinet Secretary Kazungu Kambi on Friday at the start of the extension works on the building, which currently has eight floors.
“It is gratifying to note that besides the main contractor, all other project works will be undertaken by a team of Kenyan consultants,” he added. The construction cost will rise by Sh700 million to Sh6.7 billion.
Cementers Ltd had won the contract by putting in a bid of Sh6 billion. The contract, however, became hotly contested after it emerged that the lowest bidder, China Wu Yi with a contract price of Sh5.9 billion, had been overlooked.
NSSF invited fresh bids in January this year. “I am aware that such projects have previously been marked by controversy and tendency to promote corruption. However, I am sounding a warning today that this will not be a white elephant project under my watch,” said Mr Kambi.
The partially-built Hazina Trade Centre currently hosts Nakumatt Lifestyle.
NSSF projects that it will be collecting Sh100 million in lease income from the building upon completion in about 18 months. Apart from renting, the Fund is also willing to sell off some of the floor space, which will see it retain its real estate investment below the regulatory maximum of 30 per cent.
“We already have tenancy commitments from market leaders such as Nakumatt Holdings. This confirms the viability of this project,” said Mr Kambi.
NSSF’s manager of capital and money markets, Gideon Kyengo, told the Business Daily that real estate now constitutes 26 per cent of the funds total portfolio, a drop from the non-compliant 34 per cent level last December.
He said compliance was helped by completion of sale of Embakasi houses under tenant purchase agreement.
The workers’ retirement fund has undeveloped land and plots portfolio of 16 properties valued at more than Sh8.6 billion. The fund had a total of Sh126 billion as at end of May, up from Sh121.5 billion in December.
It has proposed outsourcing the collection of workers’ contributions to the Kenya Revenue Authority with hopes of increasing monthly contributions from Sh600 million to Sh3 billion.
“The wide disparity between the number of employers settling their Pay-As-You-Earn accounts and those settling their NSSF dues will not be tolerated further,” said Mr Kambi.
High-end hotel
Besides Hazina Trade Centre, Mr Kambi said the fund intended to put up a high-end luxury hotel incorporating rental apartments and conferencing facilities on Kenyatta Avenue opposite Nyayo House.
Construction of Hazina Trade Centre project started in 1997. NSSF was unable to complete the tower and opted to lease out the completed section to Nakumatt Holdings in 2003. The fund’s projects have in the past been dogged by corruption scandals.
The proposed extension works of Hazina Trading Centre will involve the construction of a 31-storey office tower to complement the current eight floors, four basement levels, ground floor, two Mezzanine and one Podium. At 39 floors, estimated to be at a total height of 180 metres, the new building will be the tallest in East and Central Africa.
NSSF had nullified China Jiangxi bid because the company did not submit a current registration certificate for its sub-contractor, Raerex E.A. Ltd, which was to install air conditioning.
The court noted that there was no reason for disqualifying China Jiangxi at the preliminary stage of tender evaluation as it had confirmed the sub-contractor’s registration verbally with the Ministry of Public Works. NSSF also manages Bruce House, View Park Towers, and Hazina Towers.
