MPs fault state firms on irregular expenditures

Kenya National Highways Authority closes a section of Miritini-Mwache road on 13 July 2020 for renovation after it developed cracks.

Photo credit: Laban Walloga | Nation Media Group

What you need to know:

  • Kenya National Highways Authority and Kenya Airports Authority are among the parastatals that violated the law leading to loss of public funds.
  • Further, PIC wants CEOs who exceed the maximum contract variation of 25 per cent provided for under the procurement law, to be surcharged.

A parliamentary committee has indicted some State corporations for engaging in irregular procurement, contrary to the law.

The Public Investments Committee (PIC) notes in its 23rd report on the consideration of the Auditor-General’s reports on financial statements of State corporations that, the Public Procurement and Asset Disposal Act, its regulations and government circulars were misused, leading to inflated project costs.

The report of the committee chaired by Mvita MP Abdulswamad Sharif says that, some contracts were poorly managed, leading to delays in completion and in the escalation of costs.

Kenya National Highways Authority (KeNHA) and Kenya Airports Authority (KAA) are among the parastatals that violated the law leading to loss of public funds.

For instance, KeNHA had Sh341.2 million awarded to M/s Telewa Road Construction Limited for the maintenance of the Mombasa-Miritini road in the 2014/15 financial year.

Poor performance

However, the contract was terminated due to poor performance after having paid the contractor Sh144.2 million, which is 42.25 per cent of the contract sum.

KeNHA then went ahead to repackage the contract and award it to M/s SS Mehta through direct procurement at Sh292.7 million. This was in contravention of the procurement law. The variation brought the total contract expenditure to Sh436.8 million, an increase of Sh95.6 million over the original contract.

“This was in breach of the law and resulted in wasteful expenditure,” the committee’s report, currently under debate in the House, reads.

Cost variations

To forestall the wasteful expenditure of public resources, the House team wants chief executive officers of State firms to ensure proper project planning with credible feasibility studies done to reduce cost variations during execution.

Further, PIC wants CEOs who exceed the maximum contract variation of 25 per cent provided for under the procurement law, to be surcharged.  A number of projects KAA executed were similarly challenged.