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Economy

KAA on the spot over Sh413m JKIA Greenfield spend

Auditor General Edward Ouko
Auditor General Edward Ouko. FILE PHOTO | NMG  

The Kenya Airports Authority (KAA) is on the spot over Sh413.5 million it paid consultants and law firms, and ground-breaking for the terminated Greenfield Terminal at the Jomo Kenyatta International Airport (JKIA).

The termination of the contract saw taxpayers fork out Sh4.3 billion to pay a Chinese contractor who did zero job on the project.

Auditor General Edward Ouko says a review of the project revealed that as at June 30, 2017, the contractor had been paid a total of Sh4,310,901,806 while Sh216.1 million ($1292,513) had been paid to the consultant but there was no evidence of work done.

A further Sh75 million was spent on groundbreaking ceremony that was officiated by President Uhuru Kenyatta in June 2014.

KAA in 2013 awarded Anhui Construction Engineering Group Ltd in a joint venture with China Aero-Technology International Engineering Corporation the tender to build new Greenfield Terminal Package 5 at a sum of Sh64,745,354,325 ($653,782,815).

The project was for construction of a new terminal building of 8.7 million capacity passengers per year and floor area of 178,000 square-metres.

On March 9, 2016, KAA terminated the contract and asked Anhui to vacate the site that would have seen construction of 50 international and 10 domestic check points, 32 contact and eight remote gates, associated apron with 45 stands and linking taxiways.

The project was to be implemented on design-and-build but was terminated on grounds that the contract was void from the beginning.

Mr Ouko noted that PriceWaterhouseCoopers (PwC) were contracted to provide technical advisory service on the project financing at Sh29,777,268 and the contract later terminated in unclear circumstances.

“The firm presented an invoice of Sh19,356,693 but was later paid Sh7,444,882 after negotiations but this amounts to nugatory expenditure,” Mr Ouko said in a qualified audit report of KAA’s books of accounts for the year to June 2017.

He said a review of the project file and board of directors minutes for the year under review revealed that the management appointed Amolo & Gacoka Advocates to represent them in a dispute arising from the project termination.

Mr Ouko said it was not explained how the advocates were identified and their terms of engagement. He said on January 17, 2017, a representative of the advocates who was present in a special board of directors meeting requested approval to engage an international firm with expertise in quantum to conduct analysis of the value of work undertaken by the contractor and the same was granted.

“Subsequently, the advocates engaged White and Case/Blackrock for the exercise at a fee of $1,158,520 (Sh115.8 million),” Mr Ouko said.

He said it was not clear why the management sought the services of foreign consultants for valuation which could have been agreed between the authority’s engineers and the contractor/consultants,” Mr Ouko said.

“In the circumstance, it was not possible to confirm if value for money has been realised from resources already paid under the project and amounts that may become payable under the ongoing dispute,” Mr Ouko said.

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