The Kenya government has ordered Standard Chartered Bank of Kenya to pay back Sh7.7 billion that was used as insurance in the Arror and Kimwarer dams scandal.
Part of the money is to be paid by Heritage Insurance.
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.
Business Daily reported that 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.
The government cancelled the tenders for the dams construction 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.
Deputy President William Ruto is famed for saying that only Sh7 billion of the money is in question and not Sh21 billion.
Reports, however, indicate that over Sh60 billion loss to the Kenyan government is possible.
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