Ouko questions unsupported Sh4.2b advance payment for Arror dam

Auditor General Edward Ouko when he appeared before the Senate County Public and Investment Committee at County Hall, Nairobi on Wednesday on April 24, 2019. [Boniface Okendo/Standard]

The scandal involving the Sh21 billion Kimwarer and Arror dams has resurfaced after an audit report questioned the advance payment of Sh4.2 billion that was specifically paid for the construction of the Arror Dam.

Auditor General Edward Ouko has raised queries over the unsupported advance payment of Sh4.2 billion of the total budget of Sh4.5 billion that were proceeds from foreign borrowings paid to Italian Firm CMC Di Ravenna-Itinery JV yet no work has been done on the ground.

In a report tabled in the National Assembly, Mr Ouko expressed concerns that despite the payment, there was no evidence of who was paid the money, when the money was paid and by who, and who granted the authority for the money to be paid. He added that no environmental impact assessment report was given for audit.

The report of the State Department for Planning and Statistics for the year ending June 2018 questioned the advance payment that represented 15 per cent of the contract sum.

But the advanced payment had not been recommended by the Kerio Valley Development Authority (KVDA).

“The advance payment claim certificate equivalent of Sh4.2 billion that was used for payment was not dated, had not been recommended by the KVDA general manager - technical services, and was not approved by the chief executive officer of KVDA,” reads part of the report.

Forest portion

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Ouko also raised concerns that despite the advance payment, Kenya Forest Service (KFS) that was supposed to cede part of a forest portion to be used for the dam construction is yet to do that.

The project was to cost Sh23.1 billion following the signing of a financing agreement in April 2017 for a period of 15 years and a floating interest rate that was to be determined from time to time by the agent.

“Even though the advance payment was made through a memorandum payment voucher dated December 7, 2017, no work has been done on the ground to cover the payment,” reads part of the report.

In the report, Ouko also regretted that while the advertisements requesting for proposals were made on December 19, 2014, and December 24, 2019, and closed on March 18, 2015, a second stage request for proposals, which was not in line with the procurement regulations, was done with closure dates of October 30, 2015 without appropriate budgetary provisions or a financier of the project.

In a damning finding, Ouko revealed that there was no environmental impact assessment report that was provided for audit, adding that the contract awarding the works was signed on April 5, 2017, which was seven months outside the validity period of the memorandum of understanding signed between KVDA and the bidder, yet no fresh bids were issued.

In addition, he also raised concerns that there was no evidence or correspondence to show the payment was made to the contractor by the financier upon obtaining the necessary approvals in order to ensure that there was delivery and compliance with contract terms.

Ouko further raised concerns that no compensation had been done to the affected community members, adding that the agreement between the affected community and KVDA had not been confirmed thus casting the viability of the project into doubt.

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Kimwarer and ArrorCMC Di RavennaEdward OukoAuditor General