Budget team approves Sh3.6b for Kenya Navy ship.

By Alex Ndegwa

Parliamentary Budget Committee has recommended Sh3.6 billion payment for a contract entered in 2003 for construction of a Kenya Navy ship.

Taxpayers will have forked out more than Sh5 billion for the vessel built in Spain if the payment is made in July as recommended in a report tabled in the House on Wednesday.

This is Sh1 billion higher than the Sh3.9 billion initial cost of the ship expected to be delivered on July 2 if full payment is made to Spanish manufacturer, Euromarine.

In 2007, Parliament heard Sh1.55 billion had already been paid to the Spanish contractors before the process was stopped over grand corruption.

The report tabled on Wednesday by committee chairman Adan Keynan says the Defence Ministry and Euromarine have agreed on the payment terms and the delivery schedule of the naval vessel.

approve payment

In total, the Government is required to pay 34 million Euros (Sh3.6 billion) so that the ship christened MV Jasiri can be delivered by July 2.

It adds the Treasury provided Sh1 billion in the supplementary budget as part payment.

The balance is Sh2.9 billion, according to the report, although calculations indicate the difference has been prioritised in the budget for the 2012/13 financial year.

On May 2, 2007 then chairman of the Defence and Foreign Relations Committee GG Kariuki implored Parliament to approve the payments after leading a fact-finding mission to Spain.

The then Laikipia West MP explained the money, which was involved in building the ship was Sh3.9 billion of which Sh1.55 billion had been paid.

By June 2006, he added, Sh1.833 billion had not been paid, which included interest, penalties and installments.

He said the ship was 98 per cent ready and only remained to be fitted with armaments. And subject to full payments officers would be trained on how to operate the vessel.

The House heard the MV Jasiri weighs 140 tonnes, was 85 metres long and 13 metres wide. It was billed as the only one of its kind in East and Central Africa.

Its construction started in March 2003 and the MV Jasiri was officially launched to the sea in January, 2005.

The contract to secure the ship was signed in July 2003 and it was one of the 18 contentious security contracts generally described as ‘Anglo-Leasing’.

The supplier later sub-contracted the ship’s construction to another Spanish firm known as Astilleros Gondan.

blew whistle

Payments on the contract were stopped in June 2005 after then Permanent Secretary for Governance and Ethics, Mr John Githongo, blew the whistle on the Anglo Leasing contracts.

The supplier then sued the Government for withholding payments. DoD renewed negotiations with the supplier after the parliamentary committee gave the ship a clean bill of health in 2007.

The report, adopted by Parliament in May 2007, was heavily criticised by civil society groups, which accused the committee of taking part in a cover-up to swindle the Kenyan taxpayer of billions of shillings.

At the same time, the Budget committee has asked Treasury to allocate Sh1 billion for the migration of microwave communications network.

The joint project between the Defence ministry, National Security Intelligence Service and the Communications Commission of Kenya has stalled because the Government didn’t factor the funds in last year’s budget.