Defence ministry put to task over Sh1.4 billion bill

Defence PS Mohamed Ibrahim when he appeared before the National Assembly Public Accounts Committee on audit queries at Parliament.[Boniface Okendo,Standard]

A contractor is demanding Sh1.4 billion from the Ministry of Defence for failure to settle a pending bill of Sh73 million, which has accrued interest.

Members of the Public Accounts Committee yesterday heard that Kay Construction Limited entered into a deal with the Department of Defence (DoD) to pave and renovate 4.48 kilometres of Laikipia Air Base runway at a cost of Sh229 million.

The contractor completed the works in 1994 before handing over the facility for use by the Kenya Air Force fighter jets.

DoD Principal Secretary Ibrahim Mohamed told the team chaired by Ugunja MP Opiyo Wandayi that at the time of handover, the department was yet to clear a balance of Sh73 million.

The balance has since accrued interest and increased to Sh1.4 billion, with MPs questioning if some top officials could have deliberately delayed to settle the bill, to benefit from the accrued interest.

But the department defended itself saying the issue went for arbitration before proceeding to court.

“The matter went to arbitration and is now back in court. The amount has risen to Sh1.4 billion on account of accrued interest,” said the PS.

The PS further explained that the delay was caused by lack of budgetary allocation. The National Treasury had allocated Sh350 million in 2019/2020 financial year to settle part of the bill, leaving a Sh1.1 billion balance.

He said about Sh1.071 billion was yet to be paid to the contractor. DoD has since entered into talks with the contractor with a view to reduced the accrued interest.

“Although the matter is currently in court, we are trying to negotiate and see if we can half the accrued interest,” said the PS.

But Wandayi and Garissa Township MP Aden Duale put the department to task on why it had not cleared the balance at the time of completion.

Duale also questioned if the department sought the advise of the State Law Office while entering into the deal.

According to the 2018/19 audit report, the contract was planned to be executed in 18 months. The contractor completed works in January 1993 after it a seven month extension.

The firm then went to court in February 2005 when it submitted a Sh1.06 billion claim.