Chinese contractor claims Sh1.8bn in exchange dispute

Taxpayers stand to lose Sh1.18 billion following a dispute between the contractor building MPs’ 26-storey office block and Parliament.

The Parliamentary Service Commission (PSC) said the cost is set to rise after the contractor, China Jiangxi International Construction Company, demanded that Parliament pays it in US dollars. Parliament entered into a Sh5.8bn contract to build a multi-storey office block to house the expanded 416 member bi-cameral Parliament in 2012.

The tender stipulated that the contractor would be paid at Sh84 per US dollar but the contractor is demanding to be paid using the current market rate of Sh102. The Chinese contractor was to be paid 80 percent of the contract sum using US dollars and 20 percent in Kenya Shillings.

“We have so far paid Sh3.5bn or 55 percent of the contract sum. We made the payments for 15 certificates using Kenya shillings in our attempt to save public funds but the contractor insisted that we should pay using dollars and that is what certificate number 17 of Sh370.7 million was raised to meet the shortfall arising from the payment using Kenya shillings,” Senate Clerk Jeremiah Nyegenye told the Public Accounts Committee (PAC).

Mr Nyegenye appeared before PAC to respond to audit queries raised by Auditor-General Edward Ouko for the Parliamentary Service Commission (PSC) books of accounts for the year to June 2018.

Mr Ouko has questioned payment of Sh28.2 million to China Jiangxi International being interest on delayed payments.

He said as per the contract, a payment attracts interests if it remains unpaid for a period of 45 days from the date it is received by the commission.

Mr Nyegenye said the delay was accusations by the Exchequer releases by the National Treasury to finance the certificates relating to development expenditure.