Kenya has defaulted on Ksh19.6 billion loan for Arror and Kimwarer dams acquired from Italian bank Intesa San Paolo, whose first instalment was to be paid in May.
The government was scheduled to pay the first instalment of Ksh8.63 billion Kimwarer loan on May 9, and another Ksh11 billion for Arror dam on May 18.
This comes at a time investigative agencies are yet to solve the puzzle of how at least Ksh21 billion meant for the projects were lost, with no one yet convicted for the theft.
“Loan of Eur 258,688,881.72 (Ksh33bilion) repayable in semiannual instalments commencing 9th May 2021 and ending on 9th November, 2035. Loan of Eur 319,620,697.07 (Ksh40.8 billion) repayable in semiannual instalments commencing 18th May 2021 and ending on 18th November, 2035,” the government revealed in documents tabled in parliament.
According to sources quoted by Business Daily, the Italian Bank says that it is yet to receive payments, something that increases debt risk for the country.
In September 2019, President Uhuru Kenyatta ordered immediate cancellation of the Kimwarer Dam Project.
The President gave the directive after the multibillion project was found to be technically and financially not feasible by the project Technical Committee.
The President, however, directed the immediate commencement of the implementation of the Arror Multipurpose Dam project.
The president gave the directives after he received a report on the two multi-billion projects located in Elgeyo Marakwet County that saw over 25 individuals including former Treasury Cabinet Secretary and his PS Kamau Thugge charged with graft.
The three-member committee chaired by Principal Secretary for Infrastructure Prof Paul Maringa found out that no current reliable feasibility study had been conducted on the Kimwarer dam project. Other members in the committee are Quantity Surveyor Julius Matu, Eng Benjamin Mwangi and Eng John Muiruri.
“The only feasibility study carried out on a similar project twenty-eight (28) years ago had revealed a geological fault across the 800-acre project area, which would have negative structural effects on the proposed dam, ” the statement reads in part.
The committee also established that the project area is settled and would require compensation of displaced residents.
Maringa’s committee, further, stated that the project’s water supply system would require a pumping system which they found out to be unsustainable in terms of operations and maintenance costs.
“Therefore, the Technical Committee recommended to the President that the Kimwarer Dam project be discontinued, ” said Ms Dena.
On the other hand, after a thorough review of the Arror dam project, the committee found it to be economically viable.
However, it noted that it was overpriced and recommended that it’s cost be rationalized.
“As part of the cost rationalization plan, the Technical Committee has prepared a new Bills of Quantities (BQ) for a modified dam with its height scaled down to 60 metres from the original design height of 96 metres which was found to be unviable, ” the statement reads.
With the new design components and cost rationalization plan approved by the president, the Arror dam project will require about 250 acres of land and cost Ksh15.4 billion with power and Ksh13.1 billion without power.
The dam was previously estimated to cost Ksh28.3 billion.
The president formed the committee following the discovery of irregularities and improprieties surrounding the two infrastructure projects.