Auditor: NSSF to lose billions over stalled Hazina Towers

The National Social Security Fund stands to lose billions of shillings over the stalled construction of Hazina Trade Centre in Nairobi, the Auditor General has disclosed. The building currently houses Nakumatt Lifestyle branch. PHOTO: COURTESY

The National Social Security Fund stands to lose billions of shillings over the stalled construction of Hazina Trade Centre in Nairobi, the Auditor General has disclosed. The building currently houses Nakumatt Lifestyle branch.

The Auditor General said yesterday the continued stalemate with Nakumatt Holdings over the construction of an additional 36 floors is likely to lead to escalation of costs and possible claims for compensation by the contractor.

Already, the State pension fund had paid Sh1.9 billion to the contractor at the time the construction of the tower that is billed to become the tallest building in Kenya was stopped. It risks losing the said amount if the project is stopped indefinitely.

According to this report for the period ended June 30, 2015, the multi-billion shilling project that was expected to be completed in July 2016, was stopped after Nakumatt "denied the contractor access to the basement floors contrary to the provisions in the lease agreement signed in 2003".

"The reasons given for the stalling of the project was that some columns inside Nakumatt Lifestyle Supermarket needed to be reinforced and strengthened for other floors to be added," the report, published in yesterday's newspapers, says in part.

China Jiangxi International Kenya Ltd was awarded the tender after a competitive process on February 26, 2013 and was expected to take 155 weeks to complete the work. Construction started on June 17, 2013 but an audit inspection carried out on January 14 this year revealed that the work had stopped after reaching 15th floor or after doing 38 per cent of the work.

"At the time of stoppage of builders works, a total of Sh1,912,043,004 had been paid to the contractor," the report explains. The Auditor General has now recommended that NSSF should take legal action against Nakumatt to secure completion of the the building and members' contribution.

In this report, Auditor General Edward Ouko also expressed fears that NSSF is likely to lose another Sh215 million and possible additional losses over the delayed completion of Nyayo Estate Embakasi Phase 6.

He explained that while China Jiangxi International Kenya Ltd had won the tender to construct 324 units at Nyayo Embakasi for Sh2.1 billion, an inspection exercise had revealed that work on the project had stalled with only 52 units constructed.

The Nairobi county government has been cited as the main reason for the stalled project over its failure to grant relevant approvals. By the time of stoppage, the contractor had been paid Sh215,540,744.22. This was against a bank guarantee from Standard Chartered Bank that expired on September 30, 2015. The contract period had also expired on November 30, 2014.

"In the circumstances, the Fund stands at risk of losing the Sh215,540,744.22 already paid and additional losses on delayed completion of the project," the report adds.

NSSF is also staring at another possible loss amounting to Sh115 million over what the Auditor General termed as "illegal transfer of NSSF land in Upper Hill Nairobi – LR. No.209/11624."