In Summary
  • The allure of fat compensation for idling is one of the reasons projects go through costly delays borne by the taxpayer who at times take too long to gain from the developments or derive no benefit at all in the long run.

Taxpayers are losing billions of shillings through a rogue contracting practice said to be rife in government parastatals where companies earn more for delaying projects than when they complete them on time.

The allure of fat compensation for idling is one of the reasons projects go through costly delays borne by the taxpayer who at times take too long to gain from the developments or derive no benefit at all in the long run.

Last week, detectives from the Directorate of Criminal Investigations trained its guns on the Kenya Electricity Transmission Company (Ketraco) over land compensation irregularities, with similar delays having been flagged out by an internal audit report last year.

Ketraco is said to have paid Kalpataru Power Transmission Ltd some Sh964.5 million after the firm claimed Sh3.8 billion for idling and overheads.

The amounts were paid out after the Mombasa-Nairobi power line was delayed for four and half years.

The auditors were particularly concerned that officials of the power firm had agreed to some unrealistic claim rates in the contract that made it more lucrative for the contractor to stop working than be done with it.

“The total claim per month for idling and overhead is much higher than what the contractor would be paid in a month (labour costs) working at full potential (100 per cent) and exceeds the 0.5 per cent per week liquidated damages the employer can charge due to delays.

“The rate is therefore punitive to the employer and encourages the contractors to delay works as they would benefit more from the delays,” the auditors wrote.

Ketraco was also faulted for easily admitting the claims although they were exaggerated and required the firm’s bosses to justify why the contractor had to retain its full workforce and equipment idle for 21 months and get paid Sh108 million every month.

Such delays are said to be designed long before the contract begins with equipment mobilised on the ground even before wayleave acquisition has been completed.

Sunday Nation could not get comments from Ketraco over the compensations as the firm had not responded to queries.

The management, however, told the auditors in their response that the compensations had been budgeted for in this year’s (2018/19) budget and that they were within the contracts.

Page 1 of 2