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Damning dossier: Why Uhuru scrapped Kimwarer dam deal

Monday September 23 2019

Kimwarer dam.

President Uhuru Kenyatta addresses the Organisation of Africa Trade Union Unity 42nd General Council Session meeting at New Stanley, Nairobi, on September 18, 2019. He cancelled the building of Kimwarer dam. PHOTO | KANYIRI WAHIT | NATION MEDIA GROUP 

JOHN KAMAU
By JOHN KAMAU
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On the B54 road between Eldoret and Tenges lies the now famous Kimwarer village — the centrepiece of a scandal that was hatched at the National Treasury and executed through the Kerio Valley Development Authority.

For a dam that might never be built, the taxpayer has paid Sh22 billion — and chances are that it will never be recovered.

The Nation has now seen the confidential technical report which left President Uhuru Kenyatta seething last week, according to sources, and which details why the government had to stop the Kimwarer project – and order the Ministry of Water and Sanitation to carry out a restricted tendering for Arror dam.

The two contracts had been awarded to a broke Italian company, CMC di Ravenna, which has been unable to start the projects despite receiving down payments.

Its directors, plus former National Treasurer Cabinet Secretary Henry Rotich and his Principal Secretary Kamau Thugge, have been charged in court over the matter.

State House sources say that President Kenyatta was angry that the Kimwarer project, in particular, was based on a feasibility study carried out 28 years ago.

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FEASIBILITY STUDY

It also emerged that the Kimwarer dam was to be a geological disaster and would have been built on top of a seismic fault line identified in 1991 and which required further assessment before any commencement of works.

“Although the Kimwarer dam design was done in detail in 1991, the fact that no other consultant review has since been undertaken does not give the team the confidence that this project can be progressed without going through a detailed re-validation,” the report handed to the President says.

“The tectonic fault cutting across the proposed Kimwarer dam has not been investigated to establish its effect on the structural integrity of the reservoir.”

The other problem was that Kimwarer, unlike Arror, was to be a pumping scheme for both domestic and irrigation water and would have incurred high maintenance costs.

Why KVDA was eager to go for such an expensive dam is yet to be known and the suspicion within the top echelons of government is that it was kick-back-driven project.

AFFORDABLE PROJECT

Arror Dam has been in government proposals since 1986 and was projected to cost Sh414 million, but due to lack of funds, it never materialised.

By then, a feasibility study had already been done by Italian firm B&B SpA, while a separate feasibility study was done for Kimwarer Dam by G&G SpA.

While recent feasibility studies had been done on Arror, there is no current study on Kimwarer, which is a prerequisite in any tendering.

The Arror dam however passed the test since it has low maintenance costs and its domestic and irrigation water will be conveyed through gravity.

Initially, KVDA had wanted to build a Sh25.9 billion 96-metre-high rock fill dam in Arror which would have required more acreage and money to compensate the land owners.

But the technical reassessment of the project has found that a smaller dam of 55 metres would have been built to meet similar needs for the area and for only $168 million (Sh16.8 billion).

The report says that a scaled-down dam would also be financially viable since it has a positive internal rate of return — a measure used to calculate the profitability of potential investments.

COMPENSATION

Lately, land compensation has become the cash cow for wheeler-dealers.

What surprised the technical team was that Sh7.1 billion ($71 million) was set aside for “preliminaries” and which left only Sh18.8 billion as the amount provided in the Bill of Quantities for the actual construction of the dam.

Why a project would spend more than 20 per cent of the total budget on preliminaries was yet another red flag that this project had been overpriced.

According to the technical team, putting more money into preliminaries “resulted in under provision of key components of the dam and, in particular, the spillway, which was priced at Sh290 million as opposed to an estimated cost of Sh2.6 billion”.

That meant that the dam would have cost much more later.

TAXPAYERS' BURDEN

The report actually justifies the cancellation of the contract, arguing that with the under-provision of the cost of the spillway, the taxpayer would have paid an extra Sh3 billion with the cost of the entire project rising to Sh28 billion.

“If Kimwarer is undertaken by another contractor and the preliminary and general items are scaled down to realistic costs and also the consultancy services and professional fees excluded, the dam is expected to cost Sh17.2 billion,” says the report.

It also states that “an optimised Arror dam with reduced height from 96 metres to 60 metres high dam would be the least cost solution estimated to cost Sh15.4 billion”.

State House — and Water ministry insiders — feared that Kenya could end up with a white elephant in Elgeyo-Marakwet, and they questioned whether the river, or rather, the catchment area, can fill a 96-metre-high Arror dam.

WHITE ELEPHANT

Experts reported that given the prevailing hydrological patterns in the region, it was not easy to fill such a dam.

Rainfall data and hydrological assessment indicate that water flows have drastically decreased since 1961 from 80 million cubic metres to 30 million cubic metres in 1985 and, since there is no data since 1985, it was not clear how KVDA and Treasury officials came up with a 96-metre-high dam.

Minus the hydrological data, the report says, “this casts doubt on whether the proposed 96-metre-high dam has been matched to the prevailing hydrological trend… in absence of current data, it is realistic to conclude that the 96-metre-high dam is an over-design that would result into underutilised capacity.”

It was this fear of “underutilised capacity” — in other words, a white elephant — that saw the engineers redesign the entire project.