KAA managing director Alex Gitari. PHOTO | NMG The Kenya Airports Authority (KAA) is at risk of asset seizures and auction as contractors pursue Sh37 billion in debt claims against the State agency in court.
The claims are at different stages of adjudication at the arbitration tribunals, the High Court and the Court of Appeal.
The agency owes local and foreign contractors the billions of shillings in claims arising from cancellation of contracts, variation of contracts, interests on delayed payments and accrued penalties.
Data submitted to the National Assembly’s Public Investments Committee (PIC) shows that the KAA has a contingent liability of more than Sh36.9 billion as at end of June 2017.
A contingent liability is a cost incurred depending on an uncertain event such as the outcome of a pending lawsuit.
The bulk of the debt is owed to several Chinese firms that the KAA hired for several projects at the country’s major airports.
The biggest liability is the Sh17.61 billion that a joint venture of Chinese firms Anui Construction Engineering Group and China Aero-Technology International Corporation (Catic) has slapped the KAA over cancellation of a greenfield terminal project at Jomo Kenyatta International Airport (JKIA)
The greenfield terminal was to be built by ACEG-CATIC JV at an estimated cost of Sh64 billion.
The KAA terminated the contract that was awarded to ACEG-CATIC JV citing a lack of funds. Despite the KAA making an advance payment of Sh4.2 billion to the Chinese contractor, the firm is demanding an additional Sh17.6 billion for the airport project that never took off and has moved to court seeking to enforce payments.
The KAA is facing a Sh4.93 billion suit instituted by the World Duty Free in 2013 for breach of a March 1989 agreement granting the claimant exclusive rights over duty-free shops at the country’s airports.
Alex Gitari, the KAA managing director, told the committee chaired by Mvita MP Abdulswamad Nassir that the agency put in an appeal in 2018 to strike out the 2012 award that directed it to pay Sh4.94 billion ($49,096557). Sinohydro Corporation is seeking Sh1.5 billion from the agency for construction of a Sh6.2 billion runway and rehabilitation of aircraft pavement at the JKIA.Mr Gitari said the works were to be undertaken in phases subject to availability of funds but the contractor in 2019 presented a claim of Sh1.53 billion for outstanding certificates, interests accrued on delayed payment, tax refunds, retention money, and idle resources due to suspension […]