Chinese firm wants Sh22bn pay for botched JKIA tender


Jomo Kenyatta International Airport. FILE PHOTO | NMG

A Chinese company hired to build a new terminal at the Jomo Kenyatta International Airport (JKIA) wants to be paid a total of Sh22 billion for termination of its contract.

The firm, which had already received Sh4.3 billion by the time the contract was cancelled, has demanded another sum of Sh17.6 billion from the Kenya Airports Authority (KAA).

The Greenfield Terminal was to be built by ACEG-CATIC JV at an estimated cost of Sh64 billion.

“Through a letter dated November 10, 2017, the contractor submitted a claim of Sh17.6 billion to the Authority,” KAA managing director Johnny Andersen told Parliament Thursday.

The tender was cancelled in March 2016 after Sh75 million had been spent on a ground-breaking ceremony that was presided over by President Uhuru Kenyatta on May 23, 2014.

Sh129.9 million was paid to a consultant, Louise Berger, while PriceWaterHouseCoopers got Sh7 million for its role in securing the financier of the project.

Governors summoned

Parliament has since summoned two governors, Martin Wambora (Embu) and Francis Kimemia (Nyandarua) as well as Kipipiri MP Amos Kimunya and his Banisa counterpart Hassan Kulow and the KAA tender committee over the cancellation of the tender.

Mr Kimemia was the Head of Public Service and Secretary to the Cabinet while Mr Wambora served as the chairperson of the KAA board when the tender was cancelled. Mr Kimunya was the Minister for Transport.

Documents tabled before the Public Investments Committee (PIC) shows that M/s ACEG-CATIC wants KAA to pay it Sh2 billion for the preparation of bill of quantities (BOQ), Sh2.4 billion in extra costs and Sh708.2 million being 16 per cent value added tax (VAT).

The Chinese contractor has slapped KAA with a Sh500 million claim in interest and penalties for delayed payment of VAT charged by the Kenya Revenue Authority (KRA).

It is seeking a further Sh5.6 billion comprising balance of the contract for BOQ, extra cost claim, VAT and interest and penalties bringing the total claim to Sh17.6 billion.

Tender validation

“This claim has not been verified. My position as custodian of KAA who came to clean this illegal contract is that I want the money paid to the contractor (Sh4.3 billion) back. But the contractor’s position is quite opposite and therefore the need for negotiations,” Mr Andersen told the committee chaired by Mvita MP Abdulswamad Nassir.

The KAA invalidated the tender on March 29, 2016 on the grounds that there existed a number of material differecnces between the terms of the request for proposal (RFP) and the construction contract.

KAA said the construction contract excludes 16 per cent VAT from the contract price, contrary to the requirement of the RFP.

It argued that the construction contract referred to two foreign currencies and a foreign-local split contrary to the requirement of the RFP and that the contactor commenced works under the construction contract before financing agreement had been secured to finance the project, which is also inconsistent with provisions of the RFP.

Despite the then Attorney-General Githu Muigai clearing the signing of the contract “because notification and acceptance of award had been made,” he sided with the decision of KAA to terminate the same for non-compliance with the law.

Mr Andersen told MPs that after termination of the contract, the KAA, through the Ministry of Transport, sought a legal opinion from the Attorney-General’s office on invalidation of the contract.