CS Macharia tells Chinese company not to expect pay

Cabinet Secretary Ministry of Transport and Infrastrure James Macharia makes his keynote address on the Government Development Progress of his Minstry during the Inter-Ministerial Public Symposium attended by several Cabinet Secretaries at KICC Nairobi 17/03/16 PHOTO MOSES OMUSULA

Cabinet Secretary James Macharia has said the transport ministry will not pay Sh4 billion demanded by a Chinese contractor over a cancelled airport project.

His position is informed by a legal opinion sought by the ministry indicating that the Sh60 billion-worth tender to develop the Greenfield terminal was illegal. “They cannot claim anything from us...We got legal advice indicating that, indeed, the contracts were null and void,” said Mr Macharia.

His ministry will however be agreeable to an amicable settlement with China National Aero-Technology International Engineering Corporation for the civil works already completed.

“So it’s for us basically to pay them according to an amicable arrangement as opposed to them demanding money from us,” added the CS.

Termination of contracts often attracts huge penalties paid by the party that has opted out, in this case the Government of Kenya. Catic, whose Vice President Hongyou Huang, is facing unrelated tax evasion charges, is claiming Sh4 billion from the State.

Mr Huang was arrested three weeks ago following a claim by the Kenya Revenue Authority of unpaid taxes from past revenues earned, but it was not immediately clear if the income may have been derived from the airport project.

Another terminal

The Government had already paid the Chinese contractor an initial Sh4 billion for levelling the ground  before Macharia stopped the project in March after he joined the Ministry.

It is however unlikely that the works done so far would be worth anything close to the Sh4 billion paid out.

Among the reasons given for the cancellation of the project were that the new project would create idle capacity, considering that the existing airport could be expanded to meet any projected increases in passenger numbers. Macharia explained that the current capacity of the Jomo Kenyatta International Airport is 6.5 million passengers  a year, but after the ongoing improvements, the facility can handle up to 14 million passengers.

“We have capacity to take us up to 2025 and that is why I am asking if it is prudent to spend Sh100 billion to build another terminal, the Greenfield terminal, while there is enough capacity. We would rather use that money for other more demanding projects,” he said.

The awarding of the tender to the Chinese firm is thought to be among the underlying issues that have rocked the KAA, leading to the replacement of some board members and senior managers.

Former Inspector General of Police David Kimaiyo is the latest victim of the wrangling factions within the Government after he was sent packing last month.

Mr Kimaiyo was the chairman of the board and his position was taken over by retired Chief of Defence Forces Julius Karangi.

Yatich Kangugo has also been acting managing director since early last year, and is likely to be replaced in the ongoing recruitment — according to insiders. It is expected that President Uhuru Kenyatta will today  preside over the launch of two newly-completed arrival terminals. Commissioning of KCAA (Kenya Civil Aviation Authority) Hse, Terminal 1A and 1E at JKIA, was scheduled for Monday June 20 but was postponed.