KeRRA Under Probe For Sh200 Million Overpayment in Road Project

Lawmakers are investigating how the Kenya Rural Roads Authority (KeRRA) paid contractors Sh200 million beyond the agreed contract amount for a rural roads project in Western Kenya.

The Ministry of Roads and Transport faced tough questions from the Public Accounts Committee (PAC) over unexplained overpayments for consultancy charges and project financing meant for rural road and market infrastructure improvements.

Documents tabled before the PAC revealed that the project, initially budgeted at Sh1.22 billion, ended up costing Sh1.42 billion, an excess of Sh207.8 million—a violation of the Public Finance Management Act.

“On the statement of receipts and payments and other project information, as of June 2023, the project had received total funding of Sh1.427 billion against an agreed contractual funding of Sh1.220 billion, which was not explained,” the Auditor General’s report noted.

The report further revealed that the scandal ridden KeRRA had violated procurement regulations, with evidence of both overpayment and underpayment for various projects.

Lawmakers, led by Tindi Mwale, questioned why the statement of receipts showed an overpayment of Sh225.6 million, yet the total balance stood at Sh435 million, with no clear justification for the discrepancy.

Principal Secretary Joseph Mbugua denied any over-financing, arguing that the figures had not been properly adjusted to reflect the financing agreement.

“The financing agreement was between the development partner and the National Treasury. The difference between Sh1.47 billion and the agreed Sh1.27 billion is the UK component for the project—it is not over-financing,” Mbugua explained.

However, Rarieda MP Otiende Amolo dismissed the explanation, stating:

“You can’t amend what you don’t need to amend. If you say there was no over-financing, then stop there. But if you say you adjusted, you are admitting there was over-financing.”

The Auditor General also flagged Sh66.2 million in pending payments, which have remained unsettled for over a year, exposing the project to interest charges and penalties.

The prolonged non-settlement of these bills has raised concerns over the financial risks associated with the project, with MPs warning that the delays could further inflate costs and stall completion.

The PAC is expected to summon more officials from the Ministry of Roads and Transport for further clarification on the irregular payments.

KeRRA Boss Kandie involvement in over quoting tenders

This doesn’t come as a surprise, Philemon Kiprop Kandie, the corrupt Director General of KeRRA has been embroiled in multiple multibillion road construction tender disputes.

In a previous matter, he Public Procurement Regulatory Authority (PPRA) has accused KeRRA of procurement fraud, alleging that a road upgrading tender was irregularly awarded to Shengli Engineering Construction, which had the highest bid, instead of Guanxi Hydroelectric, which had the lowest bid. The PPRA claims this was part of a conspiracy involving corrupt KeRRA staff and politically connected individuals to defraud Kenyan taxpayers.

In the contested tender, one firm contesting the award, claiming it was overquoted by Sh1 billion. The PPRA warned Kandie against taking any action on the tenders until the matter is resolved, emphasizing the need to safeguard public resources. Despite the ongoing investigation, Kandie dismissed the probe, claiming the tender has already been awarded with the support of high-ranking officials, including President William Ruto and then Transport CS Kipchumba Murkomen.

Kandie’s tenure has been controversial, including a court ruling in 2023 that found his appointment illegal, though he remains in office.