Audit queries raised on Sh1.8bn ferries

Wednesday June 05 2019

Mv Jambo in operation at Likoni Channel in Mombasa on June 3, 2019. Auditor-General Edward Ouko is questioning the integrity of purchase of two ferries. PHOTO | LABAN WALLOGA | NATION MEDIA GROUP


Kenya Ferry Services (KFS) is once again on the spot for failing to account for Sh1.8 billion it used to buy two ferries from Turkey.

According the Auditor-General’s report for the financial year ending June 2018 tabled in parliament, KFS was unable to confirm the validity of the building and supply of the ferries and the accuracy of the cost.

In his report, Mr Edward Ouko said KFS made a down payment of Sh598 million to the local appointed agent in August 2015, but failed to withhold the six per cent Value Added Tax (VAT) of Sh35.8 million and another 20 per cent withholding tax totalling to Sh119.6 million.

The Auditor-General faulted KFS for failing to adhere to the professional advice of Kenya Revenue Authority to subject payments to the above taxes.

The report said despite a signed agreement dated June 27, 2015, indicating that the new ferries were to be delivered after 17 months, they had not been delivered during the conduct of this audit in November last year.



The Auditor-General’s efforts to get a confirmation of the exact amount the supplier had received from KFS and the outstanding balance were also fruitless as an email to the Turkish supplier, dated January 9, 2019, was not responded to.

“In the light of the foregoing, it has not been possible to confirm the validity, accuracy and completeness of the building and supply of two new ferries at a cost of Sh1.5 billion paid to the contractor as at June 2018,” reads the audit report.

Verification of the bid evaluation process revealed that the contract was awarded to a bidder who was ranked fourth during technical evaluation, but no explanation was provided as to how he was ultimately awarded the job.


The technical evaluation report had indicated that the winning bidder was to supply Roll on/Roll off ferries and that dead weight at designed draft was 490 tonnes, but a review of the winning bidder’s tender document revealed the bidder did not provide this information.

The KFS is also on the spot over procurement of weighbridges at a cost of Sh26 million, which are not used.

The report said the weighbridges, which were installed on both sides of the Likoni channel, had remained idle since their installation.

The agency told the Auditor-General that the weighbridges were a control measure to enhance safety by estimating the weight of vehicles boarding ferries at the channel.