KAA cancels Sh11m-a-month airport bus lease that sparked President Uhuru Kenyatta’s anger

Apron buses

NAIROBI: The Kenya Airports Authority (KAA) has heeded a presidential directive and cancelled the lease for the controversial Sh11 million-a-month transfer buses.

The lease had run from December last year, and was expected to remain in effect for seven years.

However, through a letter dated June 5 that recently came into Weekend Business’ possession, KAA Acting Managing Director Yatich Kangugo terminated the agreement at the heart of the suspension of several senior officials.

“You are hereby informed that the agreement is hereby terminated for convenience, necessity and public interest. The termination takes effect from the date thereof,” reads Mr Kangugo’s letter to the contractor, Relief & Mission Logistics.

PUBLIC FUNDS

The official communication relating to the termination came weeks after the five buses were grounded at the Jomo Kenyatta International Airport (JKIA).

KAA retired the buses a day after an angry President Uhuru Kenyatta ordered an investigation into the procurement of the airport shuttle buses.

“This is unsustainable. The people behind it will have to be arrested, taken to court and made to return public funds,” said the President.

Mr Kenyatta had gone to JKIA to officially open Terminal 2 on May 15, when he learnt of the lease.

Ms Lucy Mbugua, the then KAA managing director, was among six senior officials later interdicted for three months over the tender, pending investigations.

Company Chairman and former Inspector General of Police David Kimaiyo announced the interdiction, saying the board had sent them on compulsory leave to enable investigations.

KAA has not communicated the findings of the probe, or the progress on it.

It is also unclear if the termination of the lease arose from the investigations.

But the contractor, who has since talked to The Standard, has maintained innocence. John Kihoro, the managing director of Relief & Mission Logistics, said the specifications of the buses were provided by KAA.

One shuttle bus made by Portuguese manufacturer Cobus Industries costs about Sh45 million, according to copies of invoices and Kenya Revenue Authority tax receipts.

“I took a bank loan to finance the acquisition; it is very distressing,” said Mr Kihoro.

He is now hoping KAA will buy off the buses to enable him service the bank loans.

His company was awarded the now controversial tender in 2012, with a service agreement entered into in April last year.

ASSUME OWNERSHIP

Kihoro was also required to erect a maintenance yard for the buses at a cost of Sh60 million, with KAA expected to assume ownership on its completion, according to the service agreement.

The contract sum for the period was $120,000 (Sh11.8 million at current exchange rates) a month, which KAA would collect from various airlines. The compensation would cover all operating expenses, including salaries for the staff deployed to offer transfer services.

Kihoro now claims KAA has yet to make a single payment to his company, despite the services rendered before the termination.

Other top KAA officials suspended over the tender are finance manager John Thumbi, company secretary Victor Arika, procurement manager Lilian Okidi, airport engineer Christopher Warutere and Martin Kungu.