The East African nation of Kenya, has initiated negotiations with a Chinese company regarding compensation. The Chinese company in question, was contracted to construct the second terminal at the Jomo Kenyatta International Airport (JKIA). The contract was however cancelled as a result of fears that a dispute could cost taxpayers hundreds of millions of Kenyan Shillings.
The Board of the Kenya Airports Authority (KAA) has approved the negotiations with CATIC (which stands for China National Aero-Technology International Engineering Corporation) which has presented an asking sum of 22 billion Kenyan Shillings for the termination of the contract.
The occurrence of the decision to enter into negotiations is a visible reversal from Kenya’s previous stance of stating that the Chinese company in question, should refund the sum of 4 billion Kenyan Shillings which was the down payment for the Jomo Kenyatta International Airport (JKIA) Greenfield project which got cancelled.
Since 2016 when the Jomo Kenyatta International Airport (JKIA) project was cancelled, the Kenyan Government made it known that no work had been done at the airport even though the China National Aero-Technology International Engineering Corporation (CATIC), had received money from it; the Kenyan Government.
According to Business Daily Africa a Director at the Kenya Airports Authority (KAA) who requested for anonymity stated that, “The KAA board has approved negotiations of the contractor’s claim and has constituted a team to do so, preparations on the talks are at the moment going on.”
The Kenya Airports Authority (KAA) Director added that, “The team is supported by external legal and technical experts. Preparations for negotiations are on-going.”
The tender was in March of 2016 cancelled after a ground breaking ceremony which was presided over by President Uhuru Kenyatta on the 23rd of May 2014, had occurred. The ceremony had a total cost of 75 million Kenyan Shillings.
Consultant; Louise Berger was reportedly paid the sum of 129.9 million Kenyan Shillings, with PriceWaterHouseCoopers getting the sum of 7 million Kenyan Shillings for the part it played in getting the financier of the project.
The documents which were brought before the Public Investments Committee (PIC) revealed that the China National Aero-Technology International Engineering Corporation (CATIC) wants the Kenya Airports Authority (KAA) to pay it not less than 2 billion Kenyan Shillings for the preparation of the Bill Of Quantities (BOQ), the sum of 2.4 billion Kenyan Shillings in additional costs and the sum of 708.2 million Kenyan Shillings as the 16 percent Value Added Tax (VAT).
The Chinese company has also hit the Kenya Airports Authority (KAA) with a 500 million Kenyan Shilling claim in penalties and interest for the delay in the payment of the Value Added Tax (VAT) which was charged by the Kenya Revenue Authority (KRA).
The China National Aero-Technology International Engineering Corporation (CATIC) is in addition, asking for the sum of 5.6 billion Kenyan Shillings as well, consisting of the balance of the contract for Bill Of Quantities (BOQ), Value Added Tax (VAT), extra cost claims, penalties, as well as interest. This brings the total claim to 17.6 billion Kenyan Shillings.
The China National Aero-Technology International Engineering Corporation (CATIC) has initially been chosen to construct the 56 billion Kenyan Shilling terminal at the Jomo Kenyatta International Airport (JKIA) which was projected to begin handling a total of 20 million passengers every year, upon completion.
The Chinese company according to Business Daily Africa, had dug up the foundation for the project and also mobilized about 90 percent of the equipment needed.
Jonny Andersen who is the former Managing Director of the Kenya Airports Authority (KAA), stated that they had not been expecting to pay any sum to the China National Aero-Technology International Engineering Corporation (CATIC) especially after the legal advice which was provided to them by the then Attorney General; Githu Muigai, that indicated that the contract was void.
Jonny Andersen reportedly made it known to the Kenyan Parliament in 2019 that, “As the custodian of the Kenya Airports Authority, I stand by the position that the contract was illegal and I want that money paid to them back.”
The Members of Parliament however pointed out that Professor Githu Muigai had offered opinions which conflicted. In February of 2012, he had reportedly advised Samuel Gichuki who was the Acting Managing Director of the Kenya Airports Authority (KAA) at the time, to not terminate the procurement of the Chinese firm for the project.
The construction of the new terminal at the Jomo Kenyatta International Airport (JKIA) began to encounter problems just days after it begin. Said problems were encountered in the middle of allegations that the total cost of the project was inflated by as much as 9 billion Kenyan Shillings.
A number of the top managers at the Kenya Airports Authority (KAA), we’re subsequently put on compulsory leave in order to carry out investigations.
The Ethics and Anti-Corruption Commission later on proceeded to clear the multi billion Kenyan Shilling project. The terminal at the Jomo Kenyatta International Airport (JKIA) would have in addition to other things, a total of 50 international check-in counters, 45 aircraft parking stands, and eight (8) air bridges.
The Kenya Airports Authority (KAA) was to contribute a total of 15 percent of the required cost which was around 8.4 billion Kenyan Shillings. The balance of 48 billion Kenyan Shillings was to be provided by other financiers. These financiers include the Africa Development Bank (AfDB), the Standard Bank Group, the American Consortium AAE, and the China Exim Bank.
The Africa Development Bank (AfDB) has stated that the Jomo Kenyatta International Airport (JKIA) project would involve a 4.9 Kilometre runway, along with related infrastructure like additional parking slots for aircrafts, along with an air rescue firefighting unit.
Along with the national carrier; Kenya Airways, which makes use of the Jomo Kenyatta International Airport (JKIA) as its focal point, the airport also serves a number of other airlines including Turkish Airways, Ethiopian Airlines, Emirates, and British Airways.
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