Lebanese tycoon to wait longer for Sh3.7bn pipeline pay

The Treasury is yet to approved Sh3.7 billion ($35 million) that the Kenya Pipeline Company (KPC) needs to pay a Lebanese tycoon for works done in the building of the Mombasa-Nairobi pipeline.

Parliament heard that the amount is due to Zakhem International Construction which was hired to build the Sh48 billion new oil pipeline commonly known as Line 5.

John Ngumi, the KPC board chairman told the Senate Committee on Energy that KPC is yet to pay the $35 million in completed and certified works.

“We have project certificates of $35 million which have not been settled due to budgetary constraints. The management with the approval of the board did a proposal in 2018/19 to the Treasury for additional budget but we have not received any response to date,” he said.

Mr Ngumi told the committee chaired by Nyeri Senator Ephraim Maina that the project certificates worth $35 million had been signed off but it turned out the budget for the multi-billion shillings project had been exhausted.

Mr Maina demanded to know why KPC had failed to meet its contractual obligation when the contractor did the works on the already commissioned pipelined. “There is a presidential order that required State corporations to pay all pending bills by June 30, 2020. KPC. You and the National Treasury are in breach of this directive. It is wrong not to pay this contractor who did the work and you certified it complete without a dispute,” Mr Maina said.

Mr Ngumi said KPC has no problem in paying the $35 million so long as the budget is approved by the Treasury.

“We pay our suppliers within 14 days of lodging claims. The non-payment of the $35 million is unusual because of the exhaustion of the original budget for the project. We put in a supplementary budget and we have no authority to pay anything outside approved budget,” he said.

Mr Ngumi said KPC and Zakhem, owned by Abdallah Zakhem, are locked in disputes over additional claims on delays in completion of the project.

He said the contractor had put in a further claim of $15 million (Sh1.5 billion) on extension of time claim number 5 which was assessed but no award was recommended against the claim.