By Gakuu Mathenge

The Public Accounts Committee (PAC) has accused the Government of failing to support local construction companies.

PAC chairman Bonny Khalwale said in an interview with The Standard on Sunday that foreign firms have been making billions of shillings worth of construction jobs at the expense of local companies.

The Ikolomani MP spoke in an interview on why PAC cleared the Kirinyaga Construction of any wrong doing over delayed completion of the 46km Murang’a-Sagana-Karatina Road.

The committee instead blamed the ministry of Roads and Treasury for imposing double taxation on the company resulting in unnecessary disputes. The work started in 2003, but is yet to be completed.

Damage claims

According to the PAC report, (2004/2005), the work on the road was stalled and delayed by cash flow problems caused by Government’s introduction of new VAT payment rules in the middle of the contract.

The contractor is demanding Sh250 million in VAT tax refunds and Sh1.8 billion in damages and losses for breach of contract by the Government. The committee blamed senior civil servants for frustrating local companies out of work.

"This year we voted Sh140 billion for road construction. What Kenyans do not know is that only two local contractors have capacity to build Class A and B roads (highways) that take the bulk of the funds. The other 22 firms are non-Kenyan and repatriate all their money to their countries," he said.

The two firms take about two per cent of the total roads jobs. Local firms lose out due to high bank guarantees required for big jobs.

Chinese and European firms are currently the biggest road contractors in Kenya.

"The bulk of billions of shillings of Government procurement of goods and services is in construction. At a time when the Government policy is to upscale investment in infrastructure, it is unfortunate ministers and senior civil servants seem more keen to facilitate foreign firms at the expense of local ones" he said.

China, India and Ghana, have created state-backed revolving funds that support local firms gain bank guarantees that they cannot raise on their own.