KAA rules out pay for Chinese firm in cancelled contract

The Kenya Airports Authority (KAA) chairman David Kimaiyo. PHOTO | FILE 

By GERALD ANDAE, gandae@ke.nationmedia.com

In Summary

• KAA chairman David Kimaiyo says the Chinese contractor failed to secure financial guarantees and had been paid more than the works handled at the port.

The Kenya Airports Authority (KAA) has ruled out compensation to a Chinese firm whose contract to build new terminal at Jomo Kenyatta International Airport in Nairobi was cancelled, signalling a legal battle.

KAA chairman David Kimaiyo told the Business Daily that the Chinese firm did not deserve compensation and that the State is the aggrieved party.

The KAA said it shelved plans for a new terminal building at JKIA, whose construction President Uhuru Kenyatta launched in December 2013, due to financial pressures and excess capacity caused by recent upgrades to existing facilities.

China’s Anhui Construction and China National Aero-Technology International Engineering Corporation (Catic) had been selected to build the Sh56 billion terminal, which was expected to handle 20 million passengers a year.

Mr Kimaiyo reckons that the contractor failed to secure financial guarantees and had been paid more than the works handled at the port.

“There is no compensation, and those aggrieved can go to court. We are the aggrieved party here,” said Mr Kimaiyo in telephone interview.

The contractor is said to have been paid $4 million (Sh406 million). The Chinese firms are said to have dug the project foundation and mobilised 90 per cent of the required equipment.

The Attorney General’s office said the KAA did not seek legal advice before terminating the contract, exposing the taxpayer to the burden of footing the heavy litigation and damage fees associated with the legal battle should the courts decide in the contractor’s favour.

The Greenfield project was to turn the JKIA into Africa’s largest aviation facility in line with Kibaki administration’s vision of making Nairobi the region’s air transport hub.

Termination of the project also dampens the intense infrastructure expansion drive that the Jubilee administration launched upon coming to power in 2013.

READ: KAA now terminates contract to build new airport terminal

Termination of the airport contract also came as a surprise to potential financiers of the plan, among them the African Development Bank (AfDB).

Gabriel Negatu, AfDB regional director, said the bank had initiated preliminary discussions with the KAA for funding but had not been informed of the termination.

Such projects come with huge equipment costs and the fact that the contractor had done almost all the basics means the KAA may have to foot the demobilisation bill.

The Greenfield project has been dogged by a series of disputes, including the controversial award of the tender that at one point implicated former KAA managers in corrupt deals before the Ethics and Anti-Corruption Commission cleared them.