Jun 26, 2022

Mawazo Writing Africa

Writing about the main

Kenya defaults on Sh5bn Arror, Kimwarer dams loans

Kenya’s inability to meet its debt obligations was exposed in the Auditor-General’s recent report, which revealed the government had defaulted on servicing 5.11 billion shash.

Defaulting on debt repayments exposes the government to litigation, which can result in penalties and subsequent loss of public funds.

The late payment amount relates to three loans granted by an international bank for the construction of three dams – Arror and Kimwarer Multipurpose Dam in Elgeyo Marakwet County and Itare Dam in Nakuru County.

The Audit Report on the National Treasury’s accounts for the financial year 2020/21 shows Shillings 790.7 million for the Arror dam loan, Shillings 3.1 billion for Itare and Shillings 1.26 billion lling were payable to Kimwarer.

< p class="align--justify">“The loan agreements for these loans have not been provided for review confirming the terms of the loan and whether the termination of the loan was in accordance with the provisions of the relevant contracts,” says the audit report.

Debt stock

The country’s debt level is currently over ATS 8.6 trillion.

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Recently, the National Assembly approved a proposal to raise the country’s debt ceiling from Shillings 9 trillion to Shillings 10 trillion, giving government room for more borrowing to address the Sh846 billion deficit in the budget of Sh 3.33 trillion for the financial year 2022/23.

Read: Italian company involved in the construction of the Itare Dam was commissioned to fight the tax demand

The construction of the Sta The Arror and Kimwarer dams should cost Sh63 billion, while the construction of the Itare dam should start in 2016. It should cost Sh30 billion by the end of 2022 to harvest 100,000 cubic meters of water per day. It should serve more than 800,000 people in the cities of Molo, Njoro, Rongai, Kuresoi and Nakuru.

Three international companies – Cooperativa Muratori and Cementisti – CMC Di Ravenna Societa Cooperativa ( Italy), Itinera SPA and CMC Di Ravanna – Itinera JV SCPA have been contracted to build Arror and Kimwarer.

Projects canceled

The projects however were canceled due to irregularities in the bid and the criminal investigation department (DCI) took up the matter.

The three companies are already in court and are seeking $11.4 billion breach of contract with the government. They also want the court to find that the cancellation was unlawful.

CMC Di Ravenna was awarded the Itare dam project, but the Italian company abandoned the site and filed for bankruptcy in proceedings in his home country before work could begin on the two projects, but was not declared bankrupt.

Three years ago, President Uhuru founded Kenyatta technical committee to establish the feasibility of the Arror and Kimwarer projects.

The technical committee, chaired by Infrastructure Principal Secretary Paul Maringa, presented the report to the President on the findings of the both dams before September 18, 2019, State House, Nairobi.

Report disappeared

Surprisingly, the report disappeared without a trace. This is despite the fact that the delivery of the report was a public event covered by the media.

What now emerges is that the State House and Departments for National Treasury and Water, Sanitation and Irrigation, which were key in the conceptualization and development of the two projects, do not have a copy of the document.

Parliament has requested that the report has been submitted in-house for more than a year.

Regional and Northern Corridor Development Secretary Bellio Kipsang, whose department is responsible for implementing the two projects, added recently added a mystery to the report’s whereabouts after claiming he didn’t have it and that he never had it.

At a previous meeting with the Public Accounts Committee ( PAC) of the National Assembly super fear the revelations of Dr. Kipsang MPs.

“A task force will be established by the Pr residents. She compiles a report and hands it over to the President in full light from the cameras. But now we cannot put our hands on this report, not only as citizens but also as a parliament,” said Mr. Opiyo Wandayi, the PAC Chair.

Recommended Cancellation

The technical committee, in a press release to the State House media, had recommended that the two projects be canceled on the grounds that they were overpriced, with the Sh22.2 billion Kimwarer dam being considered as was declared unfeasible.

However, in the State House press release, Prof. Maringa’s committee recommended that the Arror Dam be advanced but scaled down to Sh15 billion.< /p>

At the time of the cancellation, the government had already committed Sh7.5 billion to the projects in two separate prepayment guarantees.

The advance payment guarantees for the contractor behind the two dams were through a commercial Loan funded by a bank in Sao Paulo, Brazil.

It was the first time that a Brazilian bank has been linked to the two projects, but it remains unclear whether the amount was paid directly to CMC Di Ravenna, the Italian company contracted to build the two dams, or through intermediaries.

As ​​CMC Di Ravenna bankrupt Sh4.1 billion had been paid to the Heritage Insurance Company and Sh3.4 billion to the Standard Chartered Insurance Company for Kimwarer as a safety guarantee for the Arror Dam.

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