Counties

Supply hitches delay Sh300m potato, banana storage facilities

potato

Traders sell potatoes at a market. FILE PHOTO | NMG

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Summary

  • Kenya missed the December target to complete the construction of potato and banana cold storage facilities for Sh300 million due to global supply chain challenges, a top official in charge of the project has said.
  • Micro and Small Enterprises Authority (MSEA) said a subcontractor hired to supply cooling equipment pulled out of the deal, citing higher costs of importation than earlier projected as a result of Covid-induced supply constraints.

Kenya missed the December target to complete the construction of potato and banana cold storage facilities for Sh300 million due to global supply chain challenges, a top official in charge of the project has said.

Micro and Small Enterprises Authority (MSEA) said a subcontractor hired to supply cooling equipment pulled out of the deal, citing higher costs of importation than earlier projected as a result of Covid-induced supply constraints.

The government in 2020 allocated Sh100 million each towards potato cold storage facilities in Nyandarua and Meru counties as well as a banana cold store in Kisii.

The MSEA has now set June as the new deadline for the project.

The construction of the cold stores in the three counties is aimed at cutting the high post-harvest losses for potato and banana farmers under President Uhuru Kenyatta’s now floundering plan to make Kenya a food secure country before his term ends in August.

“We had expected to have finished this by December 31. The main buildings are 99 percent complete, but there are subcontracts for other various things.

“The only thing that’s remaining is the (cooling) equipment, which is the single most expensive component of the project,” MSEA chief executive Henry Rithaa told the Business Daily.

“The contractor who we had given that tender could not deliver as a result of escalating costs for importing the equipment because of Covid challenges where containers were not even coming in. That contractor opted to give up the tender before doing anything and getting a cent from us.”

Covid-induced disruptions in global supply chains, especially at major ports in China and the US, increased shipping expenses by more than half last year, piling price pressures on firms.

The MSEA, the State-run agency tasked with putting up the cold stores, says it has since awarded the tender for supply of the refrigeration system for Ol'Kalau facility in Nyandarua for Sh29 million.

The bidders for Timau (Meru) and Kiamokama (Kisii) cold storage facilities were technically unsuccessful, prompting a re-advertisement with fresh bids undergoing evaluation.

The MSEA expects the cost of the equipment for the Meru storage facility to be similar to Nyandarua’s with a cap of Sh35 million, but sees higher cost for the Kisii facility for bananas.

“The first evaluation did not yield anyone technically qualified, but even if they were to be technically qualified, we would still have suffered financially because the average quotation was about Sh60 million against a budget of Sh37 million,” Mr Rithaa said.

“Internally, we are trying to see whether we can get additional financing and see whether we can go to Sh45 million budget-wise.

“Alternatively, instead of eight compartments, we can do six and start operating, and hope we get something more (funding) next year so that we do the full scope.”