Turkish ship-builder silent on Sh1.8bn KFS ferries deal

A Turkish ship-builder has snubbed the Auditor-General’s questions on how much it has received from the Kenya Ferry Services (KFS) for an undelivered vessel, amid queries on the Sh1.8 billion deal.

Auditor-General Edward Ouko says the Turkish supplier is yet to respond to a January 9, 2019, e-mail seeking confirmation of the exact amount the firm has received from KFS and the balance.

KFS management has failed to disclose full information about the stalled procurement of a Sh1.8 billion vessel from Turkey, with auditor saying it is yet to fully account for the payments.

“In light of the foregoing, it has not been possible to confirm the validity, accuracy and completeness of the building and supply of two new ferries at a cost of Sh1,519,379,614 paid to the contractor as at June 2018,” reads the audit report. Mr Ouko says KFS made a down payment of Sh598,023,000 to the localLY appointed agent of the Turkish firm in August 2015 but failed to withhold the six percent Value Added Tax (VAT) of Sh35,881,600 and another 20 percent withholding tax totalling Sh119,604,600.

The Auditor General faulted KFS for failing to adhere to professional advice from Kenya Revenue Authority to subject payments to the above taxes.

The report says that despite a signed agreement dated June 27,2015 indicating that the new ferries were to be delivered after 17 months, they had not been fully delivered during the conduct of this audit in November last year.

The KFS entered into a contract with a Turkish builder to build and supply two ferries at a total cost of Sh1.8 billion.

The first ferry — MV Jambo — was delivered in July, 2017, but the second one -— MV Safari — is yet to come. The firm was to deliver the ferries after 17 months or by November 2016, according to the contract signed on June 27, 2015.

The Parliamentary Transport Committee earlier censured managing director Bakari Gowa after he failed to disclose the amount of money paid to the manufacturer of the stalled ferry.