Taxpayers set to lose Sh2.5bn on stalled job
Taxpayers will fork out Sh2.5 billion (22 million euros) to settle a dispute with a Spanish contractor, whose tender for construction of a transmission line connecting Kenya to Uganda was terminated for non-performance.
Kenya Electricity Transmission Company (Ketraco) told Parliament that it requires the amount to settle certified works done by Inabensa, the Spanish company that has obtained court orders stopping any further works on the 132 kilometre Lessos-Tororo transmission line.
Fernandes Barasa, the Ketraco managing director, told the Public Investments Committee (PIC) that the contractor had stopped the power transmission agency from accessing the site and hiring a new contractor until a final settlement is reached.
“The Attorney-General has advised that the dispute be settled amicably to avoid a protracted and expensive arbitration process,” Mr Barasa told MPs probing a query raised by Auditor- General Edward Ouko. Mr Ouko had questioned Ketraco’s significant delays in implementing three out of seven projects, including EXIM Bank of India, Nile Equatorial Lakes Countries (NELSAP) and Nairobi Ring Transmission Line, due to non-performance. The projects are funded by donors.
The audit report had raised concern over termination of some of the contracts during the 2015/16 financial year and procurement of replacement contracts.
“In this circumstance, completion of the three projects within the approved budgets and timelines could not be confirmed,” Mr Ouko said in a qualified audit opinion of Ketraco.
Mr Barasa told MPs that settlement of the dispute would allow the court to dispense with the case and enable Ketraco to procure a new contractor to complete the project.
Ketraco awarded Inabensa the contract, which is part of the NELSAP line that traverses Uasin Gishu, Kakamega, Bungoma and Busia counties. The project is funded by the African Development Bank and the Government of Kenya.
The committee asked Mr Barasa to provide an estimate of the amount of works Inabensa had done before the contract was terminated.
“If Ketraco is to pay the 22 million euros to the Spanish firm for incomplete work, what is the level of works so far done on the 132 kilometre transmission line? What will be the new cost of the remaining works if the contract will be tendered afresh and given to the new contractor?” PIC chairman Abdulswamad Nassir asked.
PIC also sought to know the local partners of Inabensa and the amount of money the firm or individuals would receive from the compensation of the Spanish firm once the Sh2.5 billion is settled.
Mr Nassir also demanded that Ketraco furnish the committee with all contract agreements and assurances that the award of the fresh tender will be done above board.