Auditor-General Edward Ouko has raised concern over the stalled construction of the Sh6.7 billion Hazina Trade Centre in Nairobi, saying this may lead to an escalation of costs and contractual claims.
The 36-storey building is a National Social Security Fund (NSSF) project.
An inspection carried out in January 2016 showed that construction stalled after the 15th floor.
The reasons given for stopping the project was that the columns in the building that houses Nakumatt Lifestyle supermarket needed to be reinforced for the other floors to be added.
But Nakumatt Holdings Ltd, the tenant, moved to court, arguing that it was bound to suffer losses due to disruption of its business if the contractor was granted access to its space.
“The NSSF has been unable to proceed with the construction of the building after a dispute with its tenant, who has denied the contractor access to the basement floors, contrary to the provisions of the lease agreement signed in 2003,” Mr Ouko says in his audit report tabled in the National Assembly on Thursday.
Owing to the delay in completing the project, Mr Ouko now wants action taken against Nakumatt Lifestyle.
“In view of the foregoing, NSSF should take legal action against the tenant to ensure completion of the building to safeguard members’ contributions,” Mr Ouko recommended.
The construction was to be undertaken in three years, from June 2013, when the contract was awarded, but by June 30, 2016, the building had not been completed.
At the time the work was stopped, Sh1.9 billion had been paid to the contractor.
According to Mr Ouko, the contract was awarded to M/s China Jiangxi International Kenya Ltd on February 26, 2013.
The auditor-general has also warned that the NSSF, a government agency, risks losing Sh215.5 million in the delayed completion of the Nyayo housing scheme in Nairobi’s Embakasi estate.
Interestingly, the Sh2.2 billion contract to construct the 324 units was awarded to the same company, M/s China Jiangxi International Kenya Ltd.
The construction, according to the contract signed in February 2013, was to take one-and-a-half years but by June 2016 it had not been completed.
With the contract period having been scheduled to expire on November 30, 2014, Mr Ouko notes in his report that by June 2016, only 52 units had been constructed.