Chinese firm hired to build Kenya’s new Airport terminal at a cost of $640 million now wants the country to cough up $220 million for cancelling the contract

A section of JKIA
  • Kenya contracted ACEG-CATIC JV to build the Greenfield Terminal at an estimated cost of Sh64 billion ($640 million).
  • KAA invalidated the tender on March 29, 2016 on the grounds that there existed a number of material differences between the terms of the request for proposal (RFP) and the construction contract.
  • The tender was cancelled in March 2016 after Sh75 million ($750,000) had been spent on a ground-breaking ceremony that was presided over by President Uhuru Kenyatta on May 23, 2014.

A Chinese company hired to build a new terminal at the Jomo Kenyatta International Airport (JKIA) wants Kenya to cough up a total of Sh22 billion ($220 million) for cancelling the contract midway.

The firm, which had already been paid Sh4.3 billion ($43 million) by the time the contract was cancelled, now wants another sum of Sh17.6 billion ($176 million) from the Kenya Airports Authority (KAA).

Kenya contracted ACEG-CATIC JV to build the Greenfield Terminal at an estimated cost of Sh64 billion ($640 million).

“Through a letter dated November 10, 2017, the contractor submitted a claim of Sh17.6 billion to the Authority,” KAA managing director Johnny Andersen told Parliament on Thursday.

The Chinese contractor has further slapped KAA with a Sh500 million ($5 million) claim in interest and penalties for delayed payment of VAT charged by the Kenya Revenue Authority (KRA).

It is seeking a further Sh5.6 billion ($560 million) comprising the balance of the contract for bill of quantities (BOQ), extra cost claim, VAT and interest and penalties bringing the total claim to Sh17.6 billion ($176 million).

KAA invalidated the tender on March 29, 2016 on the grounds that there existed a number of material differences between the terms of the request for proposal (RFP) and the construction contract. The tender was cancelled in March 2016 after Sh75 million ($750,000) had been spent on a ground-breaking ceremony that was presided over by President Uhuru Kenyatta on May 23, 2014.

Mr Andersen told parliament that after termination of the contract, KAA, through the Ministry of Transport, sought a legal opinion from the Attorney-General’s office on invalidation of the contract.

The then Attorney-General Githu Muigai okay-ed the decision of KAA to terminate the same for non-compliance with the law despite clearing the signing of the contract “because notification and acceptance of award had been made,”

Louise Berger, a consultant was paid Sh129.9 million ($1.299 million) while PriceWaterHouseCoopers got Sh7 million ($70,000) for its role in securing the financier of the project.

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