NEWS Kenya opts out of terminal project, says new runway will meet demand

Terminal 1A at the Jomo Kenyatta International Airport. Kenya has cancelled plans to construct a greenfield terminal that was billed to turn its Jomo Kenyatta International Airport into a world class facility, citing rising costs. PHOTO | FILE 

By ALLAN OLINGO

Posted  Sunday, April 3  2016 at  08:35

IN SUMMARY

• Kenya has cancelled plans to construct a greenfield terminal that was billed to turn its Jomo Kenyatta International Airport into a world class facility, citing rising costs.
• The new terminal was expected to ease congestion at JKIA and enable it to handle the growing number of visitors. The expansion was also meant to improve cargo facilities.
• According to Mr Macharia, Kenya will not lose any capacity with the termination of the GFT project, which was meant to handle 20 million passengers a year, because the recent rebuilding of the terminals has seen the projected number rise to 14 million.
• The fate of two Chinese contractors, who had mobilised equipment for construction of the new terminal was unclear although it emerged that they had already been paid $4 million.

Kenya has cancelled plans to construct a greenfield terminal that was billed to turn its Jomo Kenyatta International Airport into a world class...

facility, citing rising costs.

President Uhuru Kenyatta launched the $650 million terminal project for Jomo Kenyatta International Airport (JKIA) in December 2013, but its cost is said to have risen to about $1 billion, forcing the government to re-evaluate its importance.

The new terminal was expected to ease congestion at JKIA and enable it to handle the growing number of visitors. The expansion was also meant to improve cargo facilities.

Transport Cabinet Secretary James Macharia told The EastAfrican that the government had opted out of the greenfield terminal (GFT) after realising that the increase in capacity at the new terminal (Terminal 1A) in the rebuilding that followed a fire at the airport in August 2013 and the building of a new runway would enable the airport to operate on a 24-hour basis.

Terminal 1A is now exclusively used by national carrier Kenya Airways and its Star Alliance partners. In the earlier plans, the airlines were to have exclusive access to the GFT terminal.

READ: Fire tragedy results in change of plans at Kenya’s airport

Kenya was expected to fund $100 million of the project, through a loan from the African Development Bank and the balance of $554 million was to be financed by a syndicate of banks. It pulled out of the project after consultations with AfDB.

“The second runway will ensure that the airport is efficient. We are planning to do the second runway through a design-and-build model in partnership with the private sector and funding from the AfDB,” Mr Macharia said.

Currently, the airport has only one runway, forcing planes to queue for either landing or takeoff.

“The second runway will ease the airlines’ flights schedules and even attract more of them to our airport,” Mr Macharia said.

According to Mr Macharia, Kenya will not lose any capacity with the termination of the GFT project, which was meant to handle 20 million passengers a year, because the recent rebuilding of the terminals has seen the projected number rise to 14 million.

“It therefore should raise the question of what the difference the greenfield terminal was going to make other than us spending $1 billion,” Mr Macharia said.

The Ministry of Transport and AfDB met mid-week to discuss the second runway.

“We agreed on the preliminary designs that will take a maximum of three months, then put out the tenders after that. The contractor will come in and do the final design within six months,” Mr Macharia said, adding that the construction should commence late this year or early next year.

Gabriel Negatu, AfDB regional director for East Africa, said that this was rational economic decision given that the rebuilding of the terminals has in away achieved what the GFT would have“We jointly agreed that the runway is the best alternative to make the airport efficient,” Mr Negatu said.

The fate of two Chinese contractors, who had mobilised equipment for construction of the new terminal was unclear although it emerged that they had already been paid $4 million.

Kenya Airports Authority chairman David Kimaiyo said the money had been paid to China’s Anhui Construction and China National Aero-Technology International Engineering Corporation (Catic) as advance payments. This was despite the firms not having secured guarantees for the project or done the commensurate work. This, he said, made the authority confident that claims for compensation by the firms would have no basis.

“I don’t think there should be compensation for the contractor. If they choose to go to court, well and good. We do believe we are actually owed money,” Mr Kimaiyo said.

Funding

The contractor was supposed to secure $554 million before the project started as the bidders for the tender were to submit a letter of intent to finance the project from a reputable financier. Anhui presented China Exim Bank and China Development Bank as its financiers but failed to secure the funds.

The big question then is, how much will KAA pay the firm for the untimely termination of the contract? Questions have also been raised as to whether there was a legally binding contract in the first place.

According to Mr Macharia, “The legal issues arising from the contractual obligations will be dealt with in terms of what was signed and whether it was a bona fide contract.”

Kenya’s Attorney-General Githu Muigai said issues to do with the contract fell under the KAA internal legal department.

“It is they who understand the fine print of what was agreed with the contractor. Our office only offered a review to the department, which was sought when KAA intended to cancel the contract,” Mr Muigai said.

For the past one year, JKIA has been operating on an 18-hour runway, while its peers in Addis and Johannesburg are working with several runways, enabling their airports to operate round the clock.

According to the KAA, the JKIA design of 1978 shows that it was to take a capacity of 2.5 million passengers.

In the past three years, KAA has completed the rebuilding of Terminal 1A Arrivals and Departures and Terminal 1B General Arrivals. Last year, it opened Terminal 2A, which is now providing an additional capacity of 5 million passengers.