Economy

Chinese contractor slaps Ketraco with Sh1.1bn interest fine

POWER

Power lines connecting pylons of high-voltage electricity. FILE PHOTO | NMG

A Chinese contractor has slapped the Kenya Electricity Transmission Company (Ketraco) with a Sh1.1 billion bill as interest for delayed payments in the latest controversy surrounding the Loiyangalani-Suswa line.

Nari-PCGE, which was hired to construct the line that is being used to evacuate electricity from Lake Turkana Wind Power (LTWP), told Parliament that it has not been paid all its dues despite completing works.

“We have written a demand notice to Ketraco and expect about Sh1 billion in interest as at last year. The interest will be Sh1.1 billion as we speak,” Nari-PCGE project manager Chen Chao told MPs.

The company was owed about a similar amount in pending bills which now means that the taxpayer should pay it Sh2.2 billion.

Nari Group was hired to complete the 428 kilometre - 400kV line from the Loiyangalani-Suswa transmission line after Spanish contractor Isolux went bankrupt.

Mr Chao, who was the project manager for the consortium of Nari Group Corporation and Powerchina Guizhou Engineering Group Ltd told MPs that the company has a contract value of $94,541,188.42 and a final account of works done which is $109,224,308.

“Amounts paid for works done is $99,712,246 (Sh11.26 billion) while the outstanding balance is $9,774,623 (Sh1.1 billion),” Mr Chao told the Public Investments Committee (PIC).

He told the committee that Ketraco invited Nari-PCGE to a competitive tender on November 30, 2017, and won the tender on January 26, 2018.

“We agreed to provide a special commitment that we will afford the euros 10 million per month in deemed generated electricity if any delay due to our reasons."

“We completed the line within six months, two months from the contract deadline,” Mr Chao told MPs.

He appeared before the committee chaired by Mvita MP Abdulswamad Nassir which is scrutinising a special audit by Auditor-General Nancy Gathungu on the LTWP project.

Ketraco spent Sh28.9 billion to construct the double circuit transmission line which is rated at 400kV but currently operates at 220kV.

The utility firm awarded the transmission line contract to Isolux at a sum of Sh16.4 billion.

Isolux completed 30 percent of the works before its contract was terminated.

Nari, the contractor that took over from Isolux was paid Sh9.6 billion while local subcontractors who did the civil works pocketed Sh1.67 billion.

Mr Chao said it negotiated with Ketraco and agreed to drop a demand notice of $24,515,913 and settled on $16,133,782 as determined by the electricity firm.

Antony Wamukota, the acting Ketraco managing director wrote to the Nari consortium on July 1, 2020, informing it that it had determined the outstanding balance as $16,133,782 against its application for $24,515,913.

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