Qatari company now challenges KAA’s airport project

Politics and policy

Jomo Kenyatta International Airport’s International Arrivals section. PHOTO | FILE 

By GEORGE OMONDI

In Summary

• Afro Asia Investment Corporation, the firm that was initially awarded the multi-billion shilling contract, has vowed to block the open tendering process that the Kenya Airports Authority (KAA) initiated two months ago.
• KAA cancelled the contract and invited fresh bids from local and international investors in July after it previously complained that the Qatari firm had failed to honour a contractual obligation to start the work within 18 months.

The planned construction of a Sh31 billion ($350 million) shopping complex at the Jomo Kenyatta International Airport in Nairobi has run into legal headwinds from a Qatari firm claiming exclusive rights over the project.

Afro Asia Investment Corporation, the firm that was initially awarded the multi- billion shilling contract under a concession agreement, has vowed to block the open tendering process that the Kenya Airports Authority (KAA) initiated two months ago.

KAA cancelled the contract and invited fresh bids from local and international investors in July after it previously complained that the Qatari firm had failed to honour a contractual obligation to start the work within 18 months.

In a letter dated October 3 and addressed to KAA managing director Lucy Mbugua, the Qatari firm maintains that the concession agreement and lease executed on January 15, 2009 are still in force.

“Therefore, the advertisements for Request for Expression of interest are in breach of the terms of the Concessions Agreement and the Lease,” Afro Asia says in the letter.

Under the controversial contract that former KAA chief executive George Muhoho signed five years ago, Afro Asia committed to invest $350 million to set up the complex called Nairobi International Convention City (NICC) on the airport land. 

The complex was to comprise a five-star hotel, a four-star hotel, a hospital, an exhibition centre, a trade centre, warehouses, service apartments, a power plant and water bore holes.

KAA, on its part, committed to lease to the Qatari firm two separate parcels of JKIA land measuring 30 and 60 acres respectively for a period of 80 years.

The firm would then operate the complex, with the option of sub leasing to specialised international investors, as KAA earns Sh80 million in concession fees annually for the first five years.

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The deal struck at the height of former president Mwai Kibaki administration’s cosy relations with the East, also promised the Qatari investor speedy processing of administrative approvals for the project.

Among the carrots that Mr Muhoho dangled before the investors was the Treasury’s immediate grant of consent for lease and gazettement of the NICC land as a duty free zone.

“Our client was therefore greatly surprised upon coming across the advertisement  ... for request for expression of interest and tenders for development of airport business zone, hotel, shopping mall and medical facility,” the letter written by lawyer Mansur Issa says, adding that the firm would move to court if the tendering is not stopped in the next 30 days.

“We hereby demand from you, immediate cancellation of the irregular tender and award of any contracts to third parties in respect of the land and contracts already leased out to our client under concession”.

KAA, with tacit backing of Parliament, the Treasury and the World Bank, has lately taken a tough stance, saying the Qatari firm had failed to meet its contractual obligations.