How Uhuru’s move to cancel Kimwarer Dam project will affect Kenya

How Uhuru’s move to cancel Kimwarer Dam project will affect Kenya

The country could lose billions of shillings should it go ahead to discontinue the Kimwarer Dam project and down-scale the Arror Dam project as directed by President Uhuru Kenyatta.

This is subject to contractual agreements that according to Water Cabinet Secretary Simon Chelugui in an earlier statement would have serious ramifications, not just financial but also on relations between Kenya and Italy.

The Arror and Kimwarer Dams project are the subject of a court case facing more than 20 officials including National Treasury Cabinet Secretary Henry Rotich. The officials face several corruption related charges among them inflating the cost of the two dams that were to be constructed in Elgeyo Marakwet County.

On Wednesday, the president cancelled the Kimwarer Dam project for being economically nonviable as its cost had been exaggerated at Ksh.22.2 billion.

The Arror dam had been costed at Ksh.28.5 billion and after a technical committee appointed by the president returned recommendations for review, it will now be downscaled to a 60 metre dam and not 96 metres — this  reducing the cost to at most Ksh.15.4 billion.

While the court case continues partly for inflating the loan sought viz-a-viz the estimated cost, and with the contractor Italian firm CMC Di Ravenna also facing charges, the presidential directive could complicate matters further.

According to Water CS Simon Chelugui who appeared at the National Assembly Environment Committee in July, options were limited in delinking with CMC Di Ravenna that is also implementing the multi-billion Itare dam in Nakuru.

At that time, Chelugui feared that cancelling the contract with the firm was untenable as it would expose the country to losing monies already paid for the project.

On top of that, the government would lose 10 percent of the contractual amount for pulling out, but also risk hurting relations between Nairobi and Rome as the contract had government interventions.

“Termination would make us lose payments we have made and it can also lead to cross-default. Meaning any other funding we get from Italy may impact on other programmes. The final decision is made through financing agreement,” said Chelugui.

At that time, Chelugui said the best option was to retain CMC Di Ravenna as the main contractor but recruit subcontractors to do the work, while the finances would be secured in an escrow account.

If Chelugui’s insights on the cancellation of the dam projects is anything to go by, then the country could lose all the funds already paid for Kimwarer dam plus 10 percent of the Ksh.22.2 billlion cost. But there is a corruption case in court, with no permanent works on the ground despite the payments.

With the Arror dam scope and cost revised to between Ksh.13 billion and Ksh.15 billion, questions abound on whether the bankrupt CMC Di Ravenna can be expected to implement it, and at what cost given the lost value of contract?

Should the government choose to award the contract to another firm, the fears CS Chelugui expressed would be a question to consider.

But in HZ area of Keiyo South, resident’s views are divided, with little concern over the country’s loss.

Calls to the members of the technical team that recommended changes to the two dam projects advised that it is the president to make public details on the way forward, with CS Chelugui distancing himself from the two dams that are under the East African affairs and regional development docket.