A Chinese firm has suspended the construction of a section of the 84-kilometre Kenol-Sagana-Marua road following a delay in payment of Sh900 million by the project financiers.
Jiangxi Transportation Engineering Group says it will not proceed with the project until the government and the African Development Bank (AfDB) pay the pending funds as per the contract agreement.
The contractor had issued a 21-day notice to the authorities through the Kenya National Highway Authority to clear the outstanding amount plus interest, but there was no response.
“The decision to suspend the works is regrettable but stems from the repeated failure of the employer to fulfil its contractual obligation.
“Specifically, we draw your attention to outstanding payments totalling Sh900 million from IPC21 to IPC31 inclusive of accrued interest due to overdue payments,” said Wang Ding Tao, a site agent on behalf of the firm.
Cash flow woes
Mr Ding Tao said failure to settle the amount owed has affected its cash flow with suppliers of essential materials, such as fuel, stopping deliveries.
“The dire situation has, regrettably, led to our inability to meet our payroll obligations, affecting the livelihoods of our employees,” says Mr Ding Tao in the letter dated November 17, 2023.
The Sh16.7 billion road, part of the Mombasa-Nairobi-Addis Ababa corridor, has been under construction since October 2020, funded by the AfDB and the Kenya government.
The construction of complementary social facilities, including building and equipping the Sagana sub-county hospital’s trauma centre, have been incorporated into the road design.
The road has been under construction in bits. Lot 1 covers the 36km Sagana-Marua road stretch, while the Lot 1 project includes the 48km Kenol-Sagana stretch.
The project is part of the Great North Road, a Pan-African artery connecting Cairo and Cape Town, which in Kenya runs from Namanga to Moyale through Nairobi.
The expansion of the road is part of efforts by Kenya and Ethiopia to deepen mutual trade relations and make it easier for landlocked Ethiopia to access Kenya’s port facilities.
Ethiopia is looking at using the road to import goods using Mombasa Port, a cheaper alternative than its current import through a Djibouti port, Ethiopian Minister of Transport Diriba Kuma said in a past interview.
Construction of the road which transverses three counties including Murang’a, Kirinyaga, and Nyeri was initially expected to take 12 months.
