State slashes college project cost by Sh4b
The government has scaled down the construction cost of Ronald Ngala Utalii College from Sh8.9 billion to Sh4.9 billion due to delayed disbursement of funds by the National Treasury.
A mega development, which is one of President Uhuru Kenyatta’s flagship projects in the Coast region, had stopped but has since resumed after the government allocated it Sh900 million.
It is located in Kilifi county is partly funded by the Tourism Fund and was expected to be completed by 2019 but slow disbursement of funds has resulted to the current delay.
According to the Fund’s board, the project is currently at 60.01 per cent completion. To date, Sh7.3 billion has been disbursed to the consortium and contractors.
“The Tourism Fund could no longer sustain the project because of the dip in collections as a result of the effects of the Covid-19 pandemic,” Fund board chairman Alfonse Kioko told the National Assembly Implementation Committee when it visited the project.
Head of the Presidential Delivery Unit, Andrew Wakahiu was also in attendance.
Kioko told the committee that over the last 12 months, the Fund has been affected by the Covid-19 global Pandemic.
In the process, 8,362 establishments where the fund collects taxes from, have been closed which accounts for 80 per cent of revenue.
“The remaining 3,234 establishments are operating at bare minimum leading to acute reduction in levy collection,” Kioko told the committee which is chaired by Moitalel ole Kenta (Narok North).
Kioko told the committee that this financial year, Sh2.3 billion has been committed to the project with the National Treasury allocating a paltry Sh200 million, Tourism Promotion Fund Sh1.5 billion and the Tourism Fund Sh600 million.
The outstanding balance of claims verified, which include certificates done by the Tourism Fund is Sh560 million.
Kilifi North MP Owen Baya had petitioned Parliament to institute a probe, as to why the project had been delayed for over two years and why it had been scaled from initial designs.
“The initial tender was Sh1.9 billion, then we were told it was Sh8.9 billion now we are being told that it has been revised down to Sh4.9 billion,” Baya said.
He said the project had lost over Sh2.9 billion in variation and penalties.
The initial concept paper and design works for the project was the development of a Sh 8.5 billion college.
“This was the initial contract signed with the consultants and contractors. However, due to austerity measures, the government revised the project to Sh4.93 billion, which is phase one of the project,” Kioko told the committee.
Phase II is the hotel component estimated at Sh5.8 billion, with about ten per cent margin of error for revision.
Kioko said the Tourism Fund is committed to obtaining a solid Public Private Partnership before commissioning to avoid interests and penalties.
“The Fund is keen on avoiding a recurrence of accrued interests and penalties due to non-payment,” Kioko added.
Kenta said it would be tragic for the project to stall and urged the National Treasury to disburse the remaining funds for completion of the first phase. “This is a national project which should not be let to fail.
We as parliament will follow up the matter, and see to it that those who have been overpaid return the money.”
Project contractor Mulji Madevj said he will be able to complete the project if the remaining Sh1.9 billion is released. So far, he has been paid Sh3.4 billion.
The committee questioned why the contractor had been allocated so much money yet the project was only half way.