Taxpayers face a Sh3 billion cost linked to Kenya Pipeline Company due to ongoing police probes. An audit revealed KPC made significant payments to a Lebanese contractor, impacted by delays and a DCI directive halting transactions. Auditor General Nancy Gathungu attributed these costs to police interventions that stopped settled payment agreements, escalating penalties. The situation arose from project mismanagement and disputes regarding claims that required lengthy investigations.
Taxpayers have incurred a substantial financial burden of approximately Sh3 billion due to ongoing police investigations into Kenya Pipeline Company (KPC). An audit revealed that KPC made a payment of Sh2.8 billion this financial year to a Lebanese firm responsible for constructing a pipeline between Mombasa and Nairobi. This payment was part of a settlement concerning interest and penalties arising from delayed claims payments.
Auditor General Nancy Gathungu stated that the police’s actions were largely responsible for this additional expenditure. The Directorate of Criminal Investigations, previously led by George Kinoti, obstructed these payments following an initial agreement between the firm and KPC. The delay in concluding these investigations was deemed unjustifiable, resulting in avoidable penalties and interest costs.
Initially, KPC and the contractor negotiated a payment of Sh6 billion for extending the project’s timeline on the 450km pipeline. However, lingering delays led to a significant additional charge of Sh2.78 billion. Gathungu highlighted a July 2019 directive from the DCI, which suspended all payments relating to this contract amid ongoing investigations, exacerbating the situation.
The pipeline, called Line 5, commenced construction in July 2014 and was designed to replace an aging pipeline. The Sh48 billion project faced delays due to design changes and additional work not accounted for in the original contract. Ultimately, the project was completed four years later, in June 2018, abandoning the initial 18-month timeline.
Following the delays, the contractor requested five extensions amounting to Sh26.4 billion, leading to disputes with the project engineer. To resolve these claims, an independent verifier was engaged, which determined a payment of Sh5.7 billion appropriate. Despite this assessment, police intervention halted payments, inciting legal action from the contractor in June 2020.
The situation concerning Kenya Pipeline Company revolves around lengthy police investigations that have incurred significant costs to taxpayers. The DCI’s interference halted payments due to unresolved claims between KPC and a Lebanese contractor, exacerbating financial penalties. This scenario underscores the impact of regulatory investigations on public finance and contractor relationships within infrastructure projects.
In conclusion, the Kenya Pipeline Company has faced substantial financial implications due to delays and police investigations, resulting in a Sh3 billion burden on taxpayers. The obstruction of payments to the Lebanese contractor has led to avoidable penalties and interest charges. Systematic issues, including design changes and contract disputes, further complicated the project timeline, necessitating independent assessments and ongoing legal scrutiny.
Original Source: www.the-star.co.ke
