Plans Underway to Revive Sh56bn JKIA Terminal Project

The Kenya Airports Authority (KAA) is set to hold talks with ACEG-CATIC JV, the Chinese firm that had been hired to build a new terminal at the Jomo Kenyatta International Airport (JKIA) in Nairobi, to revive the botched project.

Known as Greenfield Terminal, the Sh56 billion project was cancelled in March 2016 barely two years after a ground-breaking ceremony that was held on May 23, 2014.

At the time of cancellation, a down payment of Sh4.3 billion had been made to ACEG-CATIC JV, which was to undertake the construction of the Greenfield Terminal.

A total of Sh75 million was spent on ground-breaking, while Sh129.9 million was paid to consultant, Louise Berger.

PwC received Sh7 million for securing the financier of the project.

Following the termination of the contract, ACEG-CATIC JV wrote to KAA demanding to be paid a total of Sh17.6 billion for breach of contract.

The Chinese company wanted KAA to pay Sh2 billion for the preparation of the bill of quantities, Sh2.4 billion in additional costs, and Sh708.2 million value-added tax charged by KRA.

READ: Why Uhuru Killed Sh56bn Greenfield Terminal Project

The contractor demanded an additional Sh5.6 billion, which included the balance of the contract for the bill of quantities, value-added tax, and interest and penalties.

KAA on its part demanded back the Sh4.3 billion that had been paid to ACEG-CATIC JV, forcing the contractor to sue.

The case is still pending at the International Court of Arbitration.

Last month, then Transport and Public Works Cabinet Secretary nominee Kipchumba Murkomen told Parliament that he would reopen talks with ACEG-CATIC JV to revive the project.

“If approved, my priority will be to relook at the Greenfield Terminal tender which was cancelled in 2016 after the contractor had been paid Sh4.2 billion,” Mr Murkomen told MPs who were vetting him.

The nominee, who has since been approved, pledged to use his “legal background and other available resources to take this case out of court [and] renegotiate the contract”.

The Greenfield Terminal tender was reportedly cancelled due to Kenya’s failure to raise 15% of the project cost, which would have unlocked the remaining 85% budget that was to be provided by a consortium of local and foreign banks.

China Exim Bank

The KAA was to meet 15% of the required cost, which is about Sh8.4 billion, while the balance of Sh48 billion was to come from other lenders, including the China Exim Bank, Africa Development Bank (AfDB), American Consortium AAE and Standard Bank Group.

However, the government said the cancellation was informed by a study that found that the Greenfield Terminal would yield no value for money.

“We have stopped the Greenfield project because it has no value for money. We would rather spend that cash building a second runway as opposed to a new facility,” then Transport CS James Macharia said in an interview.

Mooted during the Kibaki government as part of Vision 2030, the 178,000 square metres terminal would have given JKIA an extra handling capacity of 20 million passengers a year.

The facility would have included 50 international check-in counters, eight air bridges for aircraft to dock, 45 aircraft parking stands, and an additional runaway.

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