Kenya Railways has won its bid to lift a suspension on the construction of the standard gauge railway on a piece of land in Mombasa.
The suspension, lifted on Friday, was issued by the Environment and Land Court in June pending the hearing of a case in which Kenya Railways was accused of not compensating Africa Gas and Oil and Miritini Free Port for land the railway is supposed to pass through.
Justice Asike Makhandia of the Court of Appeal allowed Kenya Railways (KR) and China Roads and Bridge Corporation (CRBC) to continue constructing on the land, overturning an earlier ruling by the lower court requiring the two corporations to pay Sh2 billion.
China Roads and Bridge Corporation has been contracted by Kenya Railways to construct the SGR.
“We are ultimately satisfied that China Road and Kenya Railways have met the conditions for a stay of execution,” Justice Makhandia said in his ruling.
“In a number of cases this court has stated that when confronted by an application such as this one before us, it must weigh the respective hardship that each party stands to suffer, and the issue is not merely the ability of a party to pay or not to pay a particular sum of money,” he added.
The land in question, which measures 41.2 hectares, had been the subject of an inquiry at public hearings in Mombasa that were conducted by the National Land Commission (NLC).
The Commission then awarded Africa Gas and Oil Ltd Sh159 million as compensation for the land and Sh360 million for interruption of business.
Trouble, however, began after African Gas and Oil Company went to court saying they had not yet been compensated and that CRBC had already moved their equipment to the site.
Soon after, Miritini Free Port did the same, saying the government compulsorily acquired their 91-hectare piece of land but has not compensated them. The land is valued at Sh1.4 billion.
The Attorney-General, NLC and CRBC were also enjoined in the suit as respondents.
Justice Anne Omollo, sitting at the Land Court in Mombasa, halted the construction only allowing CRBC to move to the site to secure their machinery.
The respondents were required to deposit Sh519 million and Sh1.4 billion awarded to the petitioners in an escrow account.
However, KR, through its lawyer Cecil Miller, argued that the order of stay was occasioning massive daily losses of Sh37,600,000 on account of idle equipment and a workforce of 1,600 personnel, yet 70 per cent of the works on the property were already completed.
Mr Miller added that while the petitioner’s claim was for compensation of the property, the orders served no legal purpose towards the enforcement of the petitioner’s claims.
“The orders as oppressive do not serve any public interest as huge amounts of public funds had already been spent on the project including consultancies, mobilisation of human resources and plant and machinery.
“They are delaying the project and are likely to induce breach of contract which will result in high penalties, huge financial losses,” he submitted.
If the claims made by the corporation in its defence are true, then it means taxpayers will have footed an extra Sh5 billion for the construction of the Sh327 billion project, which has already been dogged by claims of over pricing of land acquisition.
President Uhuru Kenyatta, who is relying on the project to be one of Jubilee government’s key successes, has perpetually said it is on course and the phase between Mombasa and Nairobi will be completed by June next year.
This will be just two months to election.
It was thought that the case by Africa Gas and Oil and Miritini Free Port would trigger a domino effect down the line as more aggrieved property owners line up cases against the contractor, the land commission, and the Attorney-General.
So far, other than the two firms, none other had come forth.
On Monday, Transport Cabinet Secretary James Macharia said the government will spend an extra Sh49 billion for electrification of the railway.