The Cabinet has the final say on the fate of the multi-billion-shilling Itare dam, Water and Sanitation Cabinet Secretary Simon Chelugui now says.
There are fears the government risks losing Sh11 billion if it cancels the contract awarded to Italian firm CMC di Ravenna.
Mr Chelugui was appearing before the National Assembly Environment committee Thursday.
However, committee members wondered why the ministry was dragging its feet despite the contractor filing for bankruptcy proceedings.
The Sh35.69 billion contract was awarded to CMC di Ravenna in 2018 to construct the dam in Nakuru. The project, which was expected to take four years, was meant to supply water in Kericho, Bomet and Nakuru counties upon completion.
However, with less than 20 per cent done, the contractor filed for bankruptcy proceedings in Italy, citing the financial challenges it was going through and therefore unable to complete the project on time.
The firm would be granted the orders as it is within Italian laws for an entity to make such court applications.
However, Mr Chelugui said it is not all doom and gloom. “We have told them to sub-contract the works but retain themselves as the main contractor...we have prepared a document that will be presented to the Cabinet for approval,” Mr Chelugui said. “Our wish is to deliver the dam.”
Mr Chelugui said the decision was reached after the Italian firm agreed to go ahead with sub-contracting only if it is allowed more time to sort out its challenges.
But committee chairman Kareke Mbiuki (Maara) wondered why the ministry is struggling to negotiate with the contractor.
“Why are you negotiating with a dead horse? Why are you negotiating with a contractor who has abandoned work? You need to activate the termination clause in the contract and deal with the contractor,” Mr Mbiuki said.
But Mr Chelugui warned: “It is not something that as a ministry we can do unilaterally. We have to consult the Treasury and the lender. If we take drastic steps we may lose the loan and it is not easy to source for another lender. The termination clause is within our powers but it remains our last resort.”