DCI suspends Sh3.3bn pay for pipeline

The Directorate of Criminal Investigations (DCI) has stopped the Kenya Pipeline Company (KPC) from making payments worth Sh3.3 billion to a Lebanese contractor who built the new Mombasa-Nairobi pipeline.

Hudson Andambi, the acting KPC managing director, told Parliament that a further Sh1.5 billion ($15.2 million) that is being claimed by Zakhem International Construction Company is yet to be evaluated.

He said the DCI, George Kinoti had directed the company not to make any payments pending the conclusion of an ongoing investigation into the procurement of the Sh48.4 billion pipeline, commonly known as Line 5.

“Extension of time (EOT) claims number 1 to 4 is currently under investigation by DCI for suspected fraud. So far, no payments have been made on the claims. There is EOT 5 amounting to $15,221095.21 yet to be evaluated,” Mr Andambi said.

The Lebanese contractor is seeking Sh4.4 billion for operational delays in the building of the Mombasa-Nairobi pipeline.

The large cost variation has been the subject of parliamentary investigation in the past but is currently being scrutinised afresh by the Energy committees of the National Assembly and the Senate.

KPC awarded Zakhem International the contract to build the 450km new pipeline at an initial cost of Sh48.4 billion. The contract was to take 18 months to complete.

But the contractor sought five extensions of time to complete the project and latter slapped the KPC with a Sh11 billion bill.

Zakhem later adjusted the figure to Sh18.9 billion before the figure was scaled down to Sh4.4 billion following the procurement of a third party expert scheduler. The amount has further been cut to Sh2.8 billion following the deduction of claim covered under variations of Sh1 billion and VAT of Sh456 million.