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Taxman to Sell Government Transformers as Bankrupt Ketraco Contractors Bail

GBR Team 24/10/2019

The Kenya Revenue Authority has listed 162 transformers worth Sh191m (US$1.9m) imported for deployment in the national electricity grid after the foreign contractors hired to build the lines plunged into bankruptcy.

The lines are part of a Sh19billion ($190m) portfolio of projects under the Kenya Electricity Transmission Company (Ketraco) flagged by the Auditor-General as possibly sunk with massive losses.

In what has become a major cause of budget hemorrhages running into billions for large-scale infrastructure projects in the country, state corporations in Energy such as Ketraco and the Geothermal Development Company have been forced to abandon project worth billions when contractors ran into financial woes.

Kerio Valley Development has also been forced to abandon mega-dam projects after the Italian contractor CMC di Ravena went bankrupt.

They form a growing narrative of mega-government projects that have been abandoned owing to contractor’s financial woes raising queries as to capacity of state corporations to carry out due diligence on foreign firms before handing them billion-shilling contracts.

The Ketraco transformers which are listed for auction on 29 October, are currently held by the Customs and Border Control directorate of KRA.

They were imported in July 2016 and destined for Ortum, West Pokot for the 90kilometre long Turkwell-Ortum-Kitale line.

While KRA told GBR it plans to delist the government property from the auction, Ketraco Managing Director Fernandes Barasa disowned the transformers saying they belonged to the contractor who was discontinued.

“These materials are under the custody of Inabenza, a contractor who was doing Lessos-Tororo transmission line,” Barasa wrote in response to queries.

However, KRA documents indicate the materials were headed to Ortum where yet another Ketraco project, the Turkwell-Ortum line ran into headwinds.

That project has since stalled after the contractor MS Joyti Structures of India ran into financial problems.

Joyti was put under liquidation with debts of over Seven billion rupees (Shs10billion) by creditors in Mumbai, India before a deal was negotiated to sell it to businessman Sharad Sanghi for Sh5.3bn.

Inabensa on the other hand saw its contract terminated by Ketraco for non-performance. It challenged the decision in court holding up the process of procuring a new contractor.

Despite failing to do significant work, Ketraco had to pay Inabensa Sh2.5billion for terminating its contract.

Barasa now says the state corporation is working with Treasury to tender the stalled projects afresh.