- Court awards in contractual rows are mainly a result of procurement blunders by government bureaucrats
- Contractors also often move to court over delayed payments or failure by parties to honour agreements
Image: FILE
The Kenya National Highways Authority is embroiled in a Sh22 billion court battle with various contractors, it has emerged.
The amount includes unclaimed interest on works, land acquisitions, unresolved contractual claims, estimated legal fees and interest awards.
While Kenha has exuded confidence that they would win the cases, Auditor General Nancy Gathungu says it is not given at taxpayers money could be at risk.
“Although, in the opinion of the management, the authority is likely to obtain favourable judgement in many of the cases, the authority‘s operations would be adversely affected if any of the liabilities was to crystallise,” the auditor warned.
Court awards are often as a result of delayed payments or failure by parties to honour agreements, some of which pile up interest claims.
The National Treasury at times fails to allocate money to projects which then accumulate costly interest.
For instance in the year under review, the auditor has queried Kenha’s spending of Sh438 million on accumulated interest on delayed payments.
Gathungu says in the report tabled in Parliament that the payments could have been avoided.
“In the circumstances, the management was in breach of the law and effective use public resources could not be confirmed.”
Data from the office of Controller of Budget indicates that Kenha owes suppliers and contractors to the tune of Sh80.9 billion, which is already attracting interest.
The government has been slow at settling court awards, citing budgetary constraints.
National Treasury data as of December 2023 revealed that the government had only settled Sh10 billion court awards, from a bill of Sh85 billion.
Gathungu has also raised concerns that the agency’s top managers are yet to address audit queries for the previous financial year, whose main highlight was on the avoidable expenses.
“However, the issues have not been discussed by the Public Audit Committee and therefore remain unresolved,” she said.
The issues touched on the soundness of the financial statements, lawfulness and effective use of public resources and on effectiveness of internal controls, risk management and governance.
Gathungu has also red-flagged two projects undertaken by Kenha in the year under review, including a spending of about Sh1.8 billion on Mau Mau Road Lot3 covering most parts of Nyeri county.
The contract was awarded to a company at Sh4.5 billion for 36 months from February 2020 but was revised to 47 months.
Gathungu says an inspection revealed that spur road (small roads or feeder roads that stem from a main road) works were at the initial stages and behind schedule despite the revised completion date of 18 February, 2024 –which is past.
Further, auditors observed that the main road drainage banks had not been reinforced by stone pitching and loose soil on the drainage sides were falling inside the drainage channels on several sections of the road.
“Delayed maintenance or repair works may result to further deterioration of the defects attracting huge repair costs. In the circumstances, effectiveness and efficiency in use of public resources could not be confirmed,” the auditor stated.
Also troubled is the maintenance of the road from Bondo to Usenge town in Siaya county where the authority has a standoff with the contractor over advance payments.
Gathungu said a review of the contract revealed that it was not mandatory for employers to pay the advance amount to the contractor and “therefore it was not enough justification for slow work progress.”
“In the circumstances, the project risks incurring additional funds due to cost escalation. In addition, delay in implementation of the project has impacted negatively on service delivery to the public.”