The government has opened talks with a Chinese firm whose contract to build the second terminal at the Jomo Kenyatta International Airport (JKIA) was cancelled amid fears the botched contract could cost taxpayers hundreds of millions of shillings in compensation.
Transport secretary James Macharia says the discussions are ongoing with the China National Aero-Technology International Engineering Corporation (Catic) without giving details.
The Kenya Airports Authority (KAA) scrapped plans for a new terminal building at JKIA, whose construction President Uhuru Kenyatta launched in December 2013, due to financial pressures and excess capacity caused by recent upgrades to existing facilities.
Catic had been selected to build the Sh56 billion terminal, which was expected to handle 20 million passengers a year, and the cancellation signalling a legal battle over compensation.
“We have almost reached a mutual agreement in our discussions, which will save taxpayers a lot of money, the negotiations have been good so far," said Mr Macharia.
He declined to reveal whether the talks centre on compensation to Catic amid reports that the Chinese firm was demanding Sh4 billion in addition to another Sh4 billion it has received for the works done since 2014.
Catic has also been keen on further compensation for loss of business and anticipated profits.
KAA chairman David Kimaiyo told the Business Daily in an earlier interview that the Chinese firm does not deserve compensation and it is the State that is the aggrieved party.
Mr Kimaiyo on Monday said he was not aware of the talks. “I am not aware of the talks, but whatever will be reached will land at my desk for approval as the chairman,” said Mr Kimaiyo.
The government demanded a refund of the cash it had paid Catic. The Chinese contractor was said to have dug the project foundation and mobilised 90 per cent of the required equipment.
Mr Macharia insists that the cancellation of the Greenfield was a good decision as the current expansion will provide enough capacity.
“Expansion and modernisation of the existing terminals will offer a capacity of up to 14 million, which is the airport’s projection for 2025,” he said.
Terminal 1E and 1A started operations last month with KAA saying the two facilities have the capacity to handle 2.5 million passengers annually.
The CS pointed out that the greenfield project would have cost Kenyans more than Sh100 billion as compared to the quoted amount of Sh50 billion.
The contract was to be financed by a loan from the African Development Bank (AfDB).