MPs: Poor finance models to blame for loss of billions in major projects

MPs: Why we are losing cash in dam projects

Members of a parliamentary committee have warned that Kenya will continue to lose billions of shillings due to lack of good financial models.

The National Assembly’s committee on Water, Environment and Natural Resources said Kenya’s dam construction was wanting because when the projects were completed they were unable to give enough returns to cover the operating cost and repayment of the money borrowed to build them.

The team, led by Maara MP Kareke Mbiuki, said this when they toured Thwake Multipurpose Dam on Tuesday.

After investigating several projects, including the Sh7 billion Galana Kulalu model farm, the MPs concluded that some of the financing models, including the one where a project was tied to a specific contractor with a certain package, were unfavourable.

“We have projects where a contractor comes tied with a certain package to work on particular work like in the case of Galana Kulalu model farm and Kiambaa Dam. The contractors in such projects just want to exhaust the money allocated. We are in the process of interrogating these models to see which ones are giving Kenyans value for their money,” said Mr Mbiuki.

They also poked holes on the Engineering, Procurement and Construction (EPC) model. “This model where Government gets money from commercial banks where the cost of repaying the loans, maintenance fee and insurance covers are high remains unfavourable. The level of competition is not intense also," he added.

They complained over the slow pace of construction of Thwake Dam.

Mbiuki said the dam's construction was at 13 per cent. “The contractor has failed, level of mobilisation is very low. One year has gone and we have less than 44 months to go and it’s not possible to complete this work within that period,” he said.

The MP said pollution of River Athi, one of those that will feed the dam, by Nairobi industries and residents should be addressed. “The issue of sewerage needs to be sorted out in most informal sectors like Kibera,” he said. [Stephen Nzioka]