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Kenya's Auditor General pokes holes at construction of landmark mall in Kisumu city

By Daniel Psirmoi | February 8th 2017

KISUMU, KENYA: Kisumu residents will have to wait a little longer for a landmark shopping mall in the city to open its doors, after a special probe by the Auditor General, established serious flouting of financial and procurement laws during the project's construction.

Auditor General Edward Ouko in a special audit tabled at the National Assembly on Tuesday, poked holes at the Sh4 billion mall project by the Lake Basin Development Authority(LBDA), noting that among other breaches, the cost of mall was heavily varied.

"The authority and a private developer entered into a contract on May, 8, 2013 to construct the mall at Sh2.41 Billion. However the cost was varied to Sh3.86 billion, a variation of Sh1.40 billion(57 per cent), which is contrary to the public procurement and disposal Regulations," reads the report in part.

According to the special audit, an examination of the LBDA financial performance established that it had a negative working capital of Sh2.19 billion and thus it cannot fund the mega project on its own, without depending on the government support.

At the same time, a scrutiny of the contract agreement between the authority and the developer revealed that LBDA was to pay Sh490 million under phase one, within a period of six months after the signing of the agreement on april 8, 2013.

But Mr Ouko in the special audit report noted that only Sh259 million had been paid as at June 2015, leaving an unpaid balance of Sh130 million, which is a breach of the contractual agreement between the two parties.

Although project is 98 per cent complete, as per a certificate of practical completeion that was issued on April 19, 2016, the mall that has a total area of 59,870 square meters has not been put into operation.

The mall which has basement, ground, mezzanine , first and second floors and a parking space for 325 cars , is designed to have special amenities for a modern shopping mall.It also has a 3-star hotel that has five flours.

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