How KPC could stir a diplomatic fallout with Lebanon
SEE ALSO :Amaco got plum KPC deal without biddingAbdallah Zakhem, the founder of Zakhem Construction International, has been the Honorary Consul of Lebanon for the past four decades. Over the period, his firm has also won several contracts in Kenya and across the world. As a diplomat, the 80-year-old could enjoy immunity from investigations, but not the rest of the family whose business interests elsewhere have been previously questioned. Information on the company’s website suggests that Mr Zakhem runs the global operations of his firm from the head office in London. Design alterations
SEE ALSO :Queries as Sh48b pipe spills dieselDetectives are now probing controversial price variations for the project that was initially priced at Sh48 billion before the firm sought an additional Sh18 billion to cover delays and design alterations. Through negotiations, the variations have since been reduced but still managed to raise concerns about possible fraud in computing the additions on the contract price. Kenya Pipeline Company (KPC) managers fast-tracked settlement of the variations without the approval of the board yet the matter was still under special audit. Over Sh1.4 billion in variation costs has already been paid out, against Sh1.7 billion that has been approved by the company’s tender committee. Zakhem International, which has previously been contracted to build the petroleum storage tanks in Mombasa and the pumping station in Morendat, Naivasha, had billed KPC Sh3.8 billion after the downward review of variations.
SEE ALSO :Deadlock after oil spillAt the heart of the investigations is whether there was collusion between the contractor and KPC to inflate the project cost. Sources involved in the negotiations have confirmed the active investigations, but could not reveal who at Zakhem Construction had been questioned. Existing standoff A tug-of-war on price variations might help explain an existing standoff between the contractor and KPC, with either party trading accusations on project delays that have extended the initial timeline by over three years. The firm says the pipeline has been completed and is undergoing testing to check its structural integrity.