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KENYA: A controversial deal through which taxpayers could have lost Sh4 billion led to the sacking of the National Social Security Fund ( NSSF) chief executive, Labour Cabinet Secretary Kazungu Kambirevealed for the first time on Tuesday.
Kambi said in an exclusive interview that the Sh6.7 billion tender to extend Hazina Trade Centre in downtown Nairobi awarded to China Jiangxi International was inflated three-fold, well above the originally projected cost of Sh2b
“We are digging to find out how this firm won this tender at such a high cost yet it should be much cheaper,” said Kambi, adding that it was among the reasons he fired the NSSF managing director Tom Odongo and another board member last month.
Odongo has already challenged his sacking in a suit that is yet to be determined at the Industrial Court. The sacked NSSF chief executive says his sacking was intended to replace him with people he describes as “politically correct”.
“It is all politically motivated but I want to ensure that no one else is victimised like me.”
“Mr Kazungu (Kambi) is not a building professional to level such claims on construction costs; this was a competitive tender,” Odongo hit back on the Cabinet Secretary’s claims of exaggerated costing of the Hazina Trade Centre.
Odongo also alleged that the NSSF Board of Trustees were shocked at his sacking, even though the same members supported Kambi in a subsequent meeting held just three days later.
Cheaper material
The Standard’s efforts to reach the Chinese contractor for a response have proved futile. The listed phone number on the yellow pages when dialed has a recurring message that the number is temporarily out of service. The firm’s local Facebook page has an image of a briefcase as company picture with no contacts or other information. It has 25 likes.
China Jiangxi is also the contractor that won the tender to build the last phase of NSSF’s Nyayo Estate in Embakasi and its parking silo that is being developed on a plot adjacent to its head offices in Milimani.
Kambi estimates that the project cost to extend the complex by 31 floors would likely be a mere proportion of the price quoted by the winning contractor, giving examples of how much cheaper comparable buildings done by the private sector were.A much bigger development project is the 33-floor Britam Tower, which has a projected budget of Sh4.2 billion to complete, according to Kambi.
Britam Tower, anticipated to be among the most energy efficient building in Nairobi harnessing electricity from wind, features 350,000 square feet (32,500 square meters) of office space and 450 parking slots, sitting on 1.5 acres of land.
Unlike the Britam Tower where the scope of works includes excavation and construction from scratch, Hazina Trade Centre has an existing eight floors that currently house Nakumatt’s chain stores flagship Lifestyle branch. Steve Oundo, the chairman of the National Construction Authority, says the unit cost of building commercial buildings with the best finishes would rarely exceed Sh60,000 per square meter.
From the above estimates and construction experts The Standard spoke to, they estimate the NSSFproject would cost no more than Sh2.5 billion.
KCB Plaza, an on-going project owned by the Kenya Commercial Bank staff retirement scheme, is projected to cost about Sh2.1 billion to complete, consisting 171,800 square feet spread over 21 floors.
The two-tower Delta Corner Office Block, built by a firm associated with Indian billionaire Mukesh Ambani, was recently sold to the University of Nairobi’s pension fund and consultancy firm PwC, for an estimated Sh4 billion. The newly-completed 20-storey office block has 251,000 square feet of top quality space.
The University of Nairobi has broken ground to build a 22-storey block that will accommodate lecture halls and several executive suites, at an estimated cost of Sh2.3 billion.
The 31 floors at the NSSF project would make up just about 400,000 square feet (approximately 40,000 sq meters), while the works neither include any excavations nor foundation as there is an existing structure. “This was an obvious wastage of members’ money,” said Kambi, referring to the comparative costs of the project with that of Britam Tower.
Odongo defended the costs saying that the works involved would produce a much higher quality of office space than any of buildings that the project was being compared to.
Another question that Kambi is raising is how the contract price shot nearly three-and-half times the initial estimate of Sh2 billion when permissions for the development of the commercial block was first granted two years ago.
Firms disqualified
Documents submitted by the NSSF when it was applying for clearance from environmental watchdog NEMA in 2011 placed the estimated budgets for the works at Sh2 billion while China Jiangxi won the tender at Sh6.7 billion early this year.Kambi claims that there have not been any significant changes in the cost of building materials that would push the overall costs up by over 250 per cent.
A senior officer who talked to The Standard in confidence said that the awarding of major contracts, such as Hazina Trade Centre, is usually managed by the Board of Trustees.
Of the two bidders knocked out in the process, one has moved to court to seek redress. Directors of Cementers declined to comment on the matter, saying they had moved to court seeking to overturnNSSF’s decision to disqualify their firm. Another Kenyan firm Laxmanbhai Construction was also among the seven firms that had applied but disqualified.
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