Kenya bound to pay Sh65 billion dams money

Solicitor General Nominee Ken Ogeto during the vetting at Parliament by Justice and Legal Affairs Committee on Friday February 3, 2018. [Boniface Okendo,Standard]

Kenya will have no choice but to pay the Sh65 billion borrowed for construction of Kimwarer and Arror dams, Solicitor General Ken Ogeto has advised.

The Solicitor General’s advisory reveals narrow options available for Kenya.

“From the foregoing, it is clear there is an absolute, irrevocable and unconditional contract actual obligation on the part of the Borrower (Kenya),” Mr Ogeto (pictured) wrote on May 27, 2019.

According to Ogeto, the contract agreement signed by the Government cushioned the contractors. It gave banks that lent the money absolute claim against Kenya for the loan’s repayment even if CMC di Ravenna, the Italian firm contracted, failed to deliver for any reasons.

It has also emerged that the project’s joint-venture partner, Itinera SPA, was never individually party to the commercial contract and as such cannot be pursued by Kenya.

Instead, the contract between Kerio Valley Development Authority (KVDA) was with the “CMC di Ravenna and Itinera SPA Joint Venture”- a contractor that ceased to be when the CMC filed for bankruptcy protection.

Ministry’s request

Ogeto was responding to a request by Margaret Mwakima, the PS at the Ministry of East Africa Community and Regional Development under which KVDA falls, on the way to proceed as the dams were evidently not forthcoming.

“It is imperative to highlight the obligations under the Financing Agreements remain due and outstanding regardless of whether the Commercial Contracts have been performed or not,” Ogeto advised.

The National Treasury executed the financing agreement on April 18, 2017. A consortium of four banks including BNP Paribas Fortis S.A and Intensa Sanpaolo provided the loans.

“Such obligations are independent and separate obligations regardless of, and are in no way conditional upon, whether the parties to the commercial contract have performed their respective obligations…” Ogeto quotes a clause in the contract with the financiers.