Economy

Queries as PS halts Sh217m pay to Chinese contractor

Labour CS Peter Tum

Labour and Social Protection Principal Secretary Peter Tum. FILE PHOTO | NMG

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Summary

  • Labour Principal Secretary Peter Tum has been accused of blocking the National Social Security Fund (NSSF) from making the payments to China Jiangxi.
  • The contractor had last year slapped the NSSF management with a Sh243 million compensation claim for delayed payments.
  • China Jiangxi was awarded the contract to upgrade the building to 36 floors from the initial eight, but work stopped on the 15th floor.

The State Department for Labour is on the spot for stopping payment of Sh217 million due to a Chinese contractor hired to build the Hazina Trade Centre in Nairobi.

Labour Principal Secretary Peter Tum has been accused of blocking the National Social Security Fund (NSSF) from making the payments to China Jiangxi, which has completed works on the NSSF’s Hazina Trade Centre.

The contractor had last year slapped the NSSF management with a Sh243 million compensation claim for delayed payments for the stalled construction of the city centre office block.

China Jiangxi was awarded the contract to upgrade the building to 36 floors from the initial eight, but work stopped on the 15th floor.

The contract prescribes that delay in settlement of contractors’ claims will earn interest at the rate of three percent above the average Central Bank of Kenya rate — which is currently at seven percent.

Mr Tum skipped a grilling session of the National Assembly’s Public Investments Committee (PIC) on Friday.

The committee chaired by Mvita MP Abdulswamad Nassir had invited the PS to explain why the State Department had stopped the NSSF from clearing the contractors’ dues, hence subjecting pensioners to accrued interests and penalties from March.

The committee wanted Mr Tum to explain why taxpayers continue to lose huge sums of money due to interest on delayed payment.

The MPs also wanted to know the ministry’s policy with regards to the settlement of pending bills and interests on delayed payment.

The NSSF board had authorised payments to the Chinese builder but when the management wrote to the PS signaling its intention to clear the Sh217 million pending bill, Mr Tum suspended the payment.