Three contractors slap KeNHA with Sh6bn bill

Road construction. FILE PHOTO | NMG
Road construction. FILE PHOTO | NMG 

Three road contractors, including two Chinese firms, have slapped the Kenya National Highways Authority (KeNHA) with a Sh6 billion bill that arose from variations of their contracts and delayed payments by the Treasury.

KeNHA director-general Peter Mundinia told Parliament that the Chinese contractors hired to build the Kakamega-Kisumu and Webuye-Kitale highways have billed the agency Sh3.5 billion and Sh2.5 billion respectively for delayed payment and change of scope of work.

The third contractor, M/s Telewa Road Construction Limited, has moved to the High Court seeking Sh1.2 billion compensation from KeNHA for termination of its Sh341.2 million contract for building the 15-kilometre Mombasa-Miritini Road. Mr Mundinia said that KeNHA terminated the contract due to non-performance.

He said the contractor moved to an arbitration tribunal seeking Sh1.2 billion compensation but was awarded Sh115 million.

Public Investments Committee chairman Abdulswamad Nassir took Mr Mundinia and Infrastructure principal secretary Julius Korir to task to explain huge variations in the three contracts.

Mr Mundinia was put under pressure to explain why the agency had varied the Kakamega-Kisumu road pushing the contract price by Sh3.5 billion to Sh8 billion.

“Under what procurement law did you use to vary the contract up to 78 per cent and above the allowable 25 per cent?” Mr Nassir asked.

Mr Mundinia appeared before the Public Investments Committee to respond to audit queries raised by Auditor-General Edward Ouko on KeNHa’s books of accounts for the year to June 2016 where he questioned payments made for the six projects.

Mr Ouko said the rehabilitation of the Kisumu-Kakamega highway was inflated to Sh8 billion from the original Sh4.5 billion. This resulted in an extra payment of Sh3.5 billion.

On the Webuye-Kitale highway, Mr Mundinia said the contractor is demanding a variation of Sh2 billion with the initial project cost rising from Sh3.4 billion to Sh5.4 billion.

“There is a variance of about Sh2 billion or about 70 per cent of the contract price,” David Muchilwa, the engineer in charge of the road said.

On the 15 kilometer Miritini road, the contract was terminated and awarded  to a new contractor M/S Mehta after varying it by more than Sh200 million.

KeNHA terminated the Sh314 million contract and paid Sh144 million for 42 per cent of work done.

Mr Mundinia said the works escalated to Sh501 million following a directive by President Uhuru Kenyatta that saw the expansion of the road leading to and out of Mombasa Port to reduce delays in evacuation of goods.

“We used section 74(3(b) of the Public Procurement Act  to award the tender through selective tendering in compliance with the Service Charter that required us to create access to vehicles coming from or to the  port. We had to do it within 90 days. If we went for open tender, we would require 60 days and hence less time to do the works. We went through selective tendering,” he said.

Mr Mundinia said the escalation of project costs were as a result of erratic weather conditions, change in road designs, delayed exchequer releases and delay in acquisition of land for expansion of the roads.

MPs however dismissed the defence saying the over 70 per cent escalation in project costs cannot be justified through weather conditions, acquisition of land an exchequer releases but conspiracy between contractors and KeNHA officials.