Mugoya Woes: NSSF seeks arbitrator to resolve row with Mugoya (May 2005)

Published on May 5, 2005, Standard

By Nyakundi Nyamboga

The High Court was yesterday told it did not have powers to compel the National Social Security Fund to have Mugoya Construction and Engineering Limited as one of its contractors.

Lawyer Macharia Njeru told Justice Leonard Njagi that courts of law could not legally impose contractors on employers. He argued that parties, including parastatal bodies, were at liberty to terminate contracts whose performance was unsatisfactory.

The court was told the performance of Mugoya Construction and Engineering in a Sh13 billion housing contract awarded them in 1995 by NSSF was far from satisfactory.

Out of over 4,000 housing units, it had completed only 1,156 three years behind schedule, the court heard.

According to the contract, Phase I of the project with a total of 1,156 units were to be practically completed and handed over by end of January 1998 while zones 2 and 3, with a total of 3,618 units, were to completed and handed over by end of April 1999.

However, the units in phase 1 did not start being delivered to NSSF until March 27, 1998, and even then in small batches and the process continued until late 2001.

The lawyer said despite this dismal performance, the contractor had been overpaid by over Sh2.7 billion over and above the contract sum.

The judge took the lawyer to task over the payment of the retention money, terming it an illegality.

Macharia urged the court to refer the matter to an arbitrator in accordance with the terms of the contract between the parties.

Mugoya Construction and Engineering will respond to the submission on May 25.