Mugoya Woes: Anti-graft team probes Sh570m housing tender (January 2006)

Published on January 26, 2006, Standard

By Nyakundi Nyamboga

The Kenya Anti-Corruption Commission is investigating a Sh570-million housing tender at the National Social Security Fund.

The investigations were launched this week following claims that the tender value had been exaggerated by more than Sh300 million.

The Justice Aaron Ringera-led anti-graft body also received claims that tendering procedures had not been followed.

The tender for the completion of 3,618 housing units at Nairobi’s Nyayo Estate in Embakasi was first advertised in November last year. NSSF asked for bids after it sacked its previous contractor, Mugoya Construction and Engineering.

The new contractor is expected to complete the housing units, which were initiated by Mugoya.

In September last year, Mugoya Construction had proposed to complete the housing units in three phases for Sh250 million. Documents show that Mugoya Construction made the proposal on September 12, 2005, after meeting NSSF officials on September 8, 2005.

NSSF’s main tender committee met last week and awarded the tender for the completion of the housing units to Lalji Bhimji Sangani, Pioneer Plumbers and N.J Vekaria. The civil works were awarded to Lalji Bhimji Sangani for Sh445,253,439, and plumbing and electrical works to Pioneer Plumbers and N.J Vekaria for Sh87,186,550 and Sh37,561,019. NSSF secretary Said Chitembwe has confirmed the tender award.

Tender advertised

Other bidders for the civil works included Don Woods Sh333,430,123.50, Dimken(K) Sh393,244,470, Epco Builders Sh418,830,109 and Haricons (K) Sh450,398,620.

In a sworn affidavit dated January 20, Chitembwe says the tender was advertised in the print media on November 18, 2005, and a meeting held on January17 at which it was awarded to the Lalji Bhimji.

The Nyayo Housing Estate project has been dogged with controversy since it was commissioned in 1995, culminating in a protracted legal battle between Mugoya Construction and NSSF.

Mugoya Construction entered into three agreements with NSSF to put up 4,774 housing units for over Sh13billion. The completion dates for the three projects were January 5, 1997, June7, 1997 and September 25, 1998.

But NSSF terminated the contracts in 2004 over alleged delay in completion of the project. Mugoya went to court challenging the termination of the contract, claiming unpaid bills of over Sh7billion.

NSSF has maintained it did not owe Mugoya Construction any money and instead claimed that it has overpaid the contractor by over Sh3 billion.

A High Court judge, Justice Philip Ransley, in November, 2005, directed the parties to appoint an arbitrator.

Last week, Justice Fred Ochieng gave a temporary order barring NSSF from awarding the tender for completion of the houses to any other party until the matter was mentioned before Justice Ransley.