State settles Ksh25B Payment to Chinese contractor Who Delivered Air
Transport Cabinet Secretary Kipchumba Murkomen has disclosed that the Kenyan government has settled Ksh25 billion to a Chinese contractor tasked with constructing a new terminal at Jomo Kenyatta International Airport before the contract’s cancellation.
This development represents a shift from Kenya’s prior stance, which insisted on a Sh4 billion refund of the down payment from the Chinese firm for the unrealided project.
Speaking before a Senate Committee, Murkomen said the government navigated a deadlock between the Kenya Airport Authority (KAA) and a Chinese company awarded the tender for the Green Field Terminal at JKIA in 2015.
Despite the previous administration granting the Chinese company the terminal construction tender in 2015, the cancellation of the tender prevented its execution.
“I report today that we have resolved the issue and settled all claims amounting to Ksh25 billion. We are now poised to initiate a new PPP, inviting contractors to bid for the construction of a terminal,” said Mr Murkomen.
In 2021, KAA said it had initiated compensation discussions with the Chinese firm following the cancellation of its contract for the second JKIA terminal, amid concerns that the impasse could burden taxpayers with substantial costs.
The previous KAA board greenlit negotiations with China National Aero-Technology International Engineering Corporation (Catic), seeking Ksh22 billion for the termination of its contract.
Since the cancellation of the JKIA contract in 2016, the government has contended that no significant progress was made at the airport, despite Catic receiving funds from the State.
The tender cancellation in March 2016, after a Sh75 million expenditure on a groundbreaking ceremony led by then President Uhuru Kenyatta in May 2014, incurred additional costs, including Ksh129.9 million paid to consultant Louise Berger and Ksh7 million to PriceWaterHouseCoopers for its role in securing project financing.
Catic, the selected Chinese contractor for the Ksh56 billion terminal capable of handling 20 million passengers annually, was reported to have initiated foundation excavation and mobilised 90 percent of the required equipment.