Nakumatt to demand Sh4.7bn from NSSF

By ANDREW TEYIE

 PHOTO | FILE Artist’s impression of the proposed Hazina Trade Centre.   NATION MEDIA GROUP

In Summary

• Chinese firm won deal to construct Sh6.5bn building to replace the Lifestyle shopping mall
• According to Nakumatt’s consultants, the supermarket chain’s compensation would be calculated from lost business and related income from tenants who have leased space from the company.

Construction of additional floors to the controversial Hazina Trading Centre in Nairobi has taken a new turn with Nakumatt supermarkets threatening to slap the National Social Security Fund (NSSF) with a Sh4.7 billion bill if they terminate a 20-year lease.

According to Nakumatt’s consultants, the supermarket chain’s compensation would be calculated from lost business and related income from tenants who have leased space from the company.

“Sh4.7 billion is cumulative. There is also direct job losses for about 620 Nakumatt workers and other tenants at Hazina Trading Centre,” said a consultant who can’t be named because he was not authorised to speak on the matter.

Nakumatt signed the Lifestyle shopping mall lease on January 1, 2004 which expires on January 1, 2024.

But documents seen by the Sunday Nation show that NSSF, the owner of the building, has proposed to compensate Nakumatt to the tune of Sh17.6 million for loss of business during the period.

The money is meant to compensate the company for loss of use of basement parking lots and the mezzanine floors.

In well laid out floor maps, NSSF claims that it will give what it terms as rental rebates during the construction period.

The plans show that China Jiangxi International Limited, that won the tender to construct the building at Sh6.5 billion to replace the shopping mall, will first build six pillars from the basement to support the proposed 39 storey structure.

According to the documents, the pillars will affect 5,965 parkings for four months which NSSF has calculated to be worth Sh17.6 million.

The Sunday Nation also established that NSSF proposed to close the mall entrance on Mokhtar Dadar Street during for three years when the building will be in construction.

TRAFFIC NIGHTMARE

According to Nairobi County government planners, the works could be a traffic nightmare for motorists and inconvenience businesses situated next to the building.

Nakumatt Lifestyle shopping mall sits between Nairobi’s Mokhtar Dadar Street and Monrovia Street, and is sandwiched by Muindi Mbingu and Koinange streets, all of which are busy roads in the city’s central business district.

Nairobi Governor Evans Kidero has ordered the developers to present an environmental impact assesment report. He argues that the construction will be a nightmare for business and motorists in Nairobi.

On Monday, the NSSF Board of Trustees met Mr Kidero who offered them alternative land for construction outside the city centre as a trade-off.

According to minutes of a meeting held on June 11, Nakumatt expressed concern over the future safety of the building if it was to carry more floors.

A structural engineer was requested to give assurances on design and strengthening of the proposed additions, according to minutes of the meeting held at NSSF headquarters.

RESERVATIONS

Nakumatt expressed reservations on continuing with business during the construction period especially on the ground and mezzanine floors. They argued that there will be disruption to traffic, customer flow and demolition of sub-tenant shops.

“The tenant expressed reservations on reinstatement of their services to the original state in order to facilitate operations,” say the minutes.
NSSF, however, assured Nakumatt that the service will be maintained “up to standard”.

The meeting was attended by representatives from NSSF, Nakumatt Holdings, the contractor and consultants.

Last week, the Sunday Nation established that the Public Procurement and Oversight Authority (PPOA) has indicted NSSF for signing an irregular contract with the Chinese company for construction of Hazina Trade Centre.

The PPOA recommended that the government take disciplinary action against China Jiangxi International for giving false information to NSSF on shareholding and directorship of their company. Labour Secretary Kazungu Kambi dismissed the report, insisting the company has a valid contract.

In 2002, NSSF was involved in another plan to construct 32 floors at the same site. The plan was scaled down to eight floors after NSSF lost Sh500 million in a scam that baffled the Public Investment Committee (PIC).

After it was scaled down, NSSF leased the building to Nakumatt holdings, which runs the Lifestyle Shopping Mall.

During PIC proceedings in the House, the then Managing Trustee Rachel Lumbasyo argued that scaling down of the building cost NSSF Sh2.3 billion.

Then, NSSF was billed to pay Sh3.1 billion for the 32-storey building that never was