House approves Sh500m more to save Lake Basin complex

The Kenyan taxpayer will fork out an additional Sh500 million to stop the auction of the Lake Basin Development Authority (LBDA) shopping complex in Kisumu following unpaid debts.

Parliament has approved the allocation through a modified supplementary budget to prevent Co-operative Bank from taking over the LBDA headquarters over a Sh2.5 billion debt.

The loan was charged to the title deed of LBDA’s land that houses its headquarters and the mall.

“The committee recommends an increase of Sh500 million to the Lake Basin Development Authority for the payment of pending bills,” Joseph Limo, the Kipkelion East MP who chaired the special committee that reviewed the mini-budget said in a report to the House.

The Treasury had in the year ended June allocated LBDA Sh1 billion to repay the debt.

The mall was built through a partnership between LBDA and a developer on a 20:80 basis respectively.

The amount owed to the developer was to be paid upon completion of the mall.

The developer (Ederman Properties Limited), who initially was to finance, build and transfer the Sh4.1 billion mall through funding from China Exim Bank borrowed the loan of Sh2.5 billion from Cooperative Bank and charged the loan to the title deed of LBDA.

The developer was to finance 80 per cent of the project while the government would fund 20 per cent.

Ederman Properties Limited failed to secure the Exim Bank financing owing to the failure by the government to put in its 20 per cent as counterpart funding.

This forced the LBDA board to enter into an arrangement to have the developer borrow Sh2.5 billion using its title deed, but failed to involve the office of the Attorney- General.