KAA faces huge losses over terminated contract

Wednesday March 30 2016

Jomo Kenyatta International Airport. FILE PHOTO | SALATON NJAU |

Jomo Kenyatta International Airport (JKIA). Kenya Airways has entered the road transport business to diversify earnings with a Sh1,000 bus ride from the city centre to JKIA. PHOTO | SALATON NJAU | NATION MEDIA GROUP

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The Kenya Airports Authority has terminated the contract for the planned construction of a new terminal at Nairobi’s Jomo Kenyatta International Airport, leaving in its wake questions senior government officials have refused to answer.

This is expected to cost the taxpayer millions of shillings, including payments to the contractor for premature termination of the agreement.
KAA said it decided to stop the project even after the contractor had mobilised equipment and completed 30 per cent of the design, because of economic constraints.

“The decision to terminate the project has been occasioned by prevailing operational, economic and financial dynamics over the last three years,” KAA said in a statement on Tuesday.

Contradictions between government officials in the parent ministry have finally rocked the plan to expand the airport threefold.

Transport Cabinet Secretary James Macharia had hinted to the Business Daily of the decision to halt the plan but his PS, Mr Irungu Nyakera, said the plan was on but the ‘government had only gone slow on it”.

China Aero-Technology Import And Export Cooperation (CATIC), tasked with the project is said to have already excavated the foundation and mobilised 90 per cent of the equipment.

The big question then is, how much will KAA pay the firm for the untimely termination of the contract?


Sources close to the Attorney-General’s office said it was possible that the KAA did not seek legal advice, taking the decision that exposes the taxpayer to a possible heavy financial burden of footing the litigation and damages fees associated with the termination.

“A decision of that nature with regard to a project of that magnitude should have passed through AG’s office but I haven’t seen it here,” said a source.

However, questions have also been raised as to whether there was a legally binding contract in the first place. The Transport secretary had also hinted in an interview with this paper that there may have been no formal agreement.

“I am not certain if a contract had been signed with the contractor, he started the work before we had formally entered into an agreement,” Mr Macharia said in an earlier interview.

Shelving the plan denies Nairobi the opportunity of hosting Africa’s largest airport and compromises major infrastructure projects initiated by the Kibaki regime.

It also dampens the high infrastructural expansion spirit that the jubilee administration had been riding on as this was among the first projects President Uhuru Kenyatta launched upon coming to power in 2013.

Greenfield terminal construction was also the second largest project after the ongoing Sh400 billion standard gauge railway project. The new terminal was to take care of increasing visitors.