• The Chinese firm is asking for Sh17.6 billion for the termination and had been paid Sh4.2 billion, whose recovery MPs said was in doubt.
• Lawmakers also cast doubt that KAA may not recover liabilities of over Sh14 billion, citing missteps by the authority.
Image: Douglas Okiddy
The Kenya Airports Authority has dismissed claims it was preparing to pay a Chinese firm billions of shillings for no work done on a second terminal at Jomo Kenyatta International Airport.
KAA boss Alex Gitari told the Public Investments Committee of Parliament that they were in no certain terms preparing to pay for the joint venture of Anhui Construction Engineering Group Ltd and China National Aero-Technology International Engineering Company (Catic).
The project, cancelled in March 2016 after launch by President Uhuru Kenyatta, was to cost Sh56 billion. It was to expand JKIA's capacity to 20 million passengers.
The Chinese firm is asking for Sh17.6 billion for the termination and had been paid Sh4.2 billion, whose recovery MPs said was in doubt.
Lawmakers also cast doubt that KAA may not recover liabilities of over Sh14 billion, citing missteps by the authorities that may expose taxpayers to avoidable losses.
Gitari told the Mvita MP Abdulswamad Nassir-led PIC team that the authority had only put together a team to help with the negotiations with the second terminal contractor.
“The project was terminated and the contractor is claiming Sh17.6 billion. As an airport operator, together with the board, we are eager to resolve the dispute and not pay the supplier,” the KAA managing director said.
He argued that JKIA was losing its footing amid competition from Rwanda, Addis Ababa, Tanzania and Uganda, hence the need for expansion.
Gitari said JKIA would have been overwhelmed had Covid-19 not disrupted the aviation business, adding that the facility has the capacity to handle eight million passengers a year.
He said the authority is unable to advertise a new tender before resolving the dispute with the Chinese contractors.
“It is thus critical to resolve the dispute. If we advertise, contractors would block the tender…we have thus put together a team to help in the negotiations,” Gitari said.
He said the team comprises senior managers from the authority, the Ministry of Transport and the Attorney General.
“We have had many meetings to prepare for negotiations, but not to pay. We have a desire to protect the public interest,” he said.
"We are preparing for negotiations in good faith. I would want to reassure the committee that the negotiation would be driven by the need to protect the public interest,” the KAA MD said.
He told MPs that the authority has reached out to the other party to prepare. “I have not said the project is being revived…just stating the strategic importance of resolving the dispute,” Gitari said.
But MPs questioned the recoverability of the already paid Sh4.2 billion, saying only a groundbreaking ceremony was held and the project cancelled.
“Are we letting the Sh4.2 billion go?” Nassir asked.
“You are not telling us anything if you cannot give indications on the plan.”
Among the debts is Sh719 million owed to a company whose tender for the provision of apron bus services was cancelled unceremoniously.
The debt was arbitrated to Sh160 million, but KAA has challenged the award in court, with MPs warning that further delays would see the same accrue interest.
Kinangop MP Kwenya Thuku informed the committee that he was privy to the circumstances under which the contract was terminated. He cited political interference.
PIC wants information on who signed up for the cancellation and to what extent the public was exposed, as well as the grounds on which KAA has challenged the award.
Gitari dismissed the assertions, saying, “The matter was investigated by the Internal Audit function and the audit was considered by the board as the basis for terminating the contract. I may not have the political angle to it.”
The committee said the cancellation will cost the authority ‘come what may’ adding that commercial contracts are terminated on a commercial basis and not in the public interest as stated by the airports' authority.
Also of concern is over Sh400 million claimed by an architectural firm for the design of KAA housing units, from a contract whose initial value was Sh4.9 million in 2000.
A lawyer who handled a case for the authority in 1989 is yet to be paid and is asking for Sh290 million, with MPs saying the bill would be costlier if not settled in good time.
A private developer who was denied permits to construct houses around Wilson Airport has also claimed Sh1 billion from KAA and wants the court to compel the agency to buy his land.
Edited A.N