Treasury to stop payment for Lamu port study

The controversy over the cost of feasibility studies on the Lamu Port corridor has deepened after it emerged that the Ministry of Finance had stopped further payments to the Japanese consultants working on what has turned out to be the most expensive study ever undertaken by the government.

The Sunday Nation has learnt that Finance permanent secretary Joseph Kinyua has written to the Office of the Prime Minister to inform them about the decision to freeze payments to Japan Port Consultants (JPC), the contractors conducting the study.

“I have already instructed the Accountant General and the Director of the Budget not to disburse the money budgeted for this project,” Mr Kinyua wrote, citing a report the Sunday Nation carried on May 22.

The letter was addressed to Dr Mohammed Isakhakia, the permanent secretary in the Office of the Prime Minister.

Following the new directive by the Treasury, an additional Sh500 million that was allocated to the project in the supplementary budget in April will not be released. Last year, the government released Sh500 million to the project.

Even before any ground has been broken for the proposed Lamu Port corridor, the project is turning out to be the latest attempt to bilk taxpayers of billions of shillings in over-priced feasibility studies and inflated salary proposals.

And although the government forced JPC to renegotiate the price of the consultancy work in March, Kenya would appear to still be legally obliged to pay a whopping Sh1.98 billion for a nine-month job involving mainly desk studies.

Worth Sh587 million

Last year, a Treasury analysis of the project concluded that the service to be provided by the consultants was worth only Sh587 million.

The country was about to pay a much higher price had the Treasury and Transport minister Amos Kimunya not balked.

The ambitious Lamu corridor project, which is said to include a port, a pipeline to Sudan and a railway, has pitted top Transport and Finance officials against each other, with the Treasury maintaining that Kenya was not getting value for money from the Japanese consultants.

The intriguing game of push and pull involving intense lobbying from the Transport ministry to Treasury and the Office of the President is playing out against a backdrop of persistent claims that a member of an influential political family is behind the political pressure exerted on the Treasury to release billions of shillings to the consultants.

Transport PS Cyrus Njiru has defended the project study, saying the big price tag reflects the complexity and magnitude of the undertaking.