NSSF has revived plans to construct Nairobi’s tallest office tower by inviting new bids for the 36-storey Hazina Trade Centre, whose development stalled over a tendering dispute.
The statutory retirement fund had in 2011 awarded the construction tender to Cementer Limited, but companies that lost the bid — China Jiangxi International Kenya and China Wu Yi — challenged the tendering in court.
In December, the court ruled against NSSF by cancelling the tender, forcing a restart of the process which the workers’ fund hopes to conclude by end of February.
“The tender is closing by the end of the month (January), we expect to have concluded valuation and awarding of the tender by end of February,” said Tom Odongo, the managing trustee of NSSF.
It is estimated the building will cost Sh6 billion going by Cementers Limited’s quote in their cancelled bid. Cementer’s bid was the third lowest among the 10 that were submitted then; China Wu Yi was the lowest bidder at Sh5.9 billion.
The Times Tower, which houses the Kenya Revenue Authority (KRA), is currently the tallest building in East Africa at 140 metres high but could lose this position to Hazina Trade Centre upon its completion.
The tower is to be built on top of the structure currently housing Nakumatt Lifestyle in Nairobi’s central business district.
NSSF has locked the door to companies involved in court battles with the fund, with an exemption to cases on procurement process. The exemption opens the door for China Jiangxi and China Wu Yi to submit their bids once more.
The tender committee had said the China Jiangxi bid was nullified because the company did not submit the current registration certificate for its sub-contractor, Raerex E.A. Ltd, which was to install air conditioning.
But the review board noted that there was no reason for disqualifying Chain 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 holds the bulk of its portfolio in real estate, 39 per cent as at December 2011, which is above the Retirement Benefits Authority (RBA’s) recommended maximum of 30 per cent.
Mr Odongo said it is not always feasible to be in complete compliance with the RBA’s asset portfolio guidelines.
“Ours is a balancing act. The equities market has been going up, therefore increasing the value of our investments in stocks proportionately,” said Mr Odongo.
In 2011, the value of shares listed on the Nairobi Securities Exchange lost an estimated 28 per cent while real estate rose substantially, tilting the fund’s portfolio in favour of immovable assets.
However, in 2012 the stock market picked up, recording a 28 per cent growth, helping NSSF’s portfolio to rebalance. The retirement fund has also announced plans of disposing some of its buildings in a bid to reduce its holding in real estate.
Those earmarked for sale include Hazina Towers valued at Sh1 billion and View Park Towers (Sh1.8 billion) and which has already attracted government interest. It is seeking space to host its enlarged structures such as the Senate under the new system.
As at end of 2011, NSSF assets were valued at Sh97.9 billion with 29 per cent invested in listed shares while 25 per cent was in government securities.
Pension funds are required to hold some of their investment in liquid assets so as to help them meet cash demands by retirees.
RBA is planning to review the investments threshold and has held meetings with the World Bank on possible changes.