The government has demanded for a mega payment of Sh. 7.7 billion from Standard Chartered Bank and Heritage Insurance. The money is being demanded as insurance guarantees paid for the controversial Arror and Kimwarer dams.
The State Department for Northern Corridor and the Kerio Valley Development Authority (KVDA) is demanding Sh. 4.1 billion from Heritage Insurance for the Arror dam. The national government is also seeking Sh. 3.6 billion from Standard Chartered Bank for the Kimwarer dam ahead of the expiry of the guarantee in June next year.
“I can confirm that the Treasury has recalled Sh. 4.1 billion guarantee for Arror dam project. I cannot, however, confirm whether the money has hit the Treasury accounts. Heritage Insurance had guaranteed that if there is non-performance on the part of the contractor, they will give us the advance payment,” Dr. Belio Kipsang who is the Regional Development PS said on the demand surrounding the Arror dam scandal.
According to a report that appeared in the Business Daily on Monday, these payments are similar to the performance bond. “They are due to the failure to construct the two dams by Italian construction company CMC di Ravenna, which was paid billions of shillings and has since filed for bankruptcy,” the report said.
Dr. Kipsang said the Standard Chartered payout is linked to the advance payment made to the Italian contractor for the Kimwarer dam. “We will be recalling the insurance guarantee from Standard Chartered Bank before it expires in June 2023,” he said.
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President Uhuru Kenyatta, in September 2019 cancelled the Kimwarer dam project after investigations established that it was technically and financially unfeasible. The Arror Dam scandal also turned up the heat politically with the president ordering a completion at half the cost.
