The cost of two dams under investigation in Elgeyo Marakwet County was increased by 10 per cent to cater for unforeseen emergencies, according to documents seen by the Sunday Nation.
When Kerio Valley Development Authority (KVDA) inked the agreements for the construction of Arror and Kimwarer multipurpose dams on April 5, 2017, with a joint venture of two Italian firms CMC di Ravenna and Itenera S.P.A., the issue of contingency had not been factored in.
“This contract award did not have contingencies, however during negotiations with National Treasury, Financiers, and Employer (KVDA), has been decided to add 10 per cent contingencies,” reads the contract agreements for both dams.
“The contingency will be utilised for any unforeseen cost overruns upon authorisation of the employer,” reads the contracts, which were signed by KVDA managing director David Kimosop and Paolo Porcelli, who was head of Southern Africa operations at CMC di Ravenna before becoming the chief executive of the company in July last year.
The pair of contracts indicate that Arror dam in Marakwet West constituency cost of $252,188,732.27 (equivalent to Sh25.42 billion at today’s exchange rate) while Kimwarer dam in Keiyo South constituency will cost $204,020,149.02 (equivalent to Sh20.56 billion).
The two projects are being financed through a loan from the Italian government. If the 10 per cent contingency is factored in for both dams, the total cost comes to Sh28 billion for Arror dam and around Sh23 billion for Kimwarer.
CMC di Ravenna is also constructing the Itare dam in Kuresoi North, Nakuru County, at a cost of Sh27 billion. However, the ability of the company to undertake the three massive projects to conclusion has been seriously called into question after it was declared insolvent by an Italian court in December last year.
Directorate of Criminal Investigations boss Mr George Kinoti maintained that the Italian firms — CMC di Ravenna and Itenera S.P.A. — had been paid Sh21 billion for the two projects.
However, Deputy President William Ruto, the National Treasury Cabinet Secretary Henry Rotich and KVDA have all claimed — through public statements and paid up advertisements in local newspapers — that the amount in question is Sh7 billion.
One of the questions that DCI officers ask is why the companies were paid the money even before work started or the sites of the dams acquired from land owners who are yet to be compensated.
However, one of the conditions of the contract was that the government would give the Italian firms an advance payment in order for work to start.
One of the documents in our possession indicates that the government remitted from the Paymaster General Account 201,982.53 euros (Sh20.3 million) on July 26, 2017 to the firms’ accounts at Intesa Sanpaolo Bank, London branch, in respect of Arror dam. We could not immediately establish the purpose of this payment, but the government then remitted another 579,562.20 euros (Sh65.5 million).