Delayed Ketraco projects to cost taxpayers dearly
Auditor General has warned that rescheduled multi-billion projects under the watch of Kenya Electricity Transmission Company (Ketraco) will cost taxpayers dearly after the contracted company went burst.
Mumbai-based Jyoti Structures Ltd has been put on the spot for a deal to design, deliver and commission lines and substations between 2013 and 2017 at an approved budget of Sh6.5 billion, with a government counter-funding of Sh3 billion.
The report by Auditor General Nancy Gathungu tabled in the National Assembly on February 18 notes that, the contract which was signed on April 16, 2013 was supposed to have been completed by June 30, 2019, but had to be terminated for non-performance.
The project suffered a setback, when Jyoti’s contract was terminated for non-performance, and insolvency, and the work has since been handed over to China CAMC Engineering Co. Limited.
Jyoti was to construct transmission lines between Bomet, Soti; Nanyuki to Nyahururu; Olkaria-Narok, and Lessos to Kabarnet at a cost of $15.1 million (Sh547 million, exchange rate at the time) as well as Ishiara, to Kieni; Mwingi, Kitui, Wote and Sultan Hamud at a cost of $10 million (Sh403 million).
Financed by the African Development (AfDB) and the Kenya Government through the Ministry of Energy and Petroleum and the National Treasury, the project involved construction of 431 km of 132KV lines, extension of six substations and construction of 8 new substations.
In the second instance, Gathungu said the same company was to deliver 132/33KV substations and 132KV line bay extensions at a combined cost of $29.7 million (Sh3.7 billion) but failed due to insolvency, leading to AfDB terminating its funding for the project.
“There has been appointed a new contractor, China CAMCE Company Limited to complete the transmission lines from where Jyoti Steel Structures Limited had reached,” said Gathungu, naming the locations as Olkaria-Narok, Lessos-Kabarnet, Sultan Hamud-Wote-Kitui-Mwingi, and Nanyuki-Rumuruti.
Within schedule
“Consequently, the project may not be completed within schedule, resulting in delayed provision of expected services to the stakeholders,” she added.
The report indicates that the project was beset with pending bills issues totalling Sh727.73 million as at June 2020.
During the year under review, she said, the project management made payments totalling Sh74.8 million but accumulated bills worth Sh206 million. Gathungu warned the project was at risk of incurring significant interest costs and penalties with continued delay in payments.
In terms of budget control and performance, Gathungu said the statement of comparative budget and actual amounts of the year ended June 30, 2020, reflects actual receipts of Sh548.6 million against budgeted receipts of Sh462 million, resulting in an excess of Sh86,643,715.
Compensation to landowners for wayleaves acquired since inception of the project in April 16, 2013 amounted to Sh2.3 billion while amounts certified as payable amounted to Sh1.98 billion out of which Sh1.7 billion was paid, leaving an unpaid balance of Sh298 million.
“The management has attributed failure to pay the amount due to lack of budgetary allocation from the National Treasury and lengthy land valuation negotiations due to absentee land owners and various court injunctions on disputed cases,” said Gathungu
