The Auditor-General has raised the red flag over direct payments of Sh4.4 billion from a Chinese lender to telecoms giant Huawei for the construction of the Konza Data Centre.
Nancy Gathungu says the lender could not produce documents to validate the payments to Huawei, raising concerns that taxpayers could lose billions of shillings through unsubstantiated payment demands.
The Konza project, conceived in 2017 by the ICT ministry and Huawei, entails the development of core infrastructure including a national cloud data centre, a smart ICT network, a public safe city and smart traffic solution, and a government cloud and enterprise service.
The Chinese tech giant Huawei was picked to develop the Konza Data Centre and Smart City.
“Annexes to the contract containing the terms and conditions of the contract including timelines, deliverables, and payment schedules in support of the payments were not provided,” Ms Gathungu said in the latest audit of the State Department for ICT tabled in Parliament last week.
“Consequently, the validity of Sh4,393,499,464 included in the reported proceeds from foreign borrowings totaling Sh11,273,229,015 for the year ended June 30, 2020 could not be ascertained,” Ms Gathungu said in the report dated May 12, 2021.
Article 206 of the Constitution requires that all money raised or received by or on behalf of the national government shall be paid into the Consolidated Fund.
“Money may be withdrawn from the Consolidated Fund only in accordance with an appropriation by an Act of Parliament, in accordance with Article 222 or 223 or as a charge against the Fund as authorised by this Constitution or an Act of Parliament,” the Constitution states.
It also bars the withdrawal of money from the Consolidated Fund unless the Controller of Budget has approved the transaction.
Ms Gathungu said the financing agreement for the Konza Data Centre was signed on April 19, 2019, which was almost two years after the contract award date of June 22, 2017.
Kenya and China signed project delivery agreements worth Sh67.5 billion for the Konza Data Centre and Smart Cities Project by Huawei and the Jomo Kenyatta International Airport-James Gichuru expressway, the 27 kilometre double-decker road which is under construction in Nairobi.
President Uhuru Kenyatta, who was in China for the second Belt and Road Initiative (BRI) forum in April 2019, witnessed the signing of the Konza and Expressway deals that were to be fulfilled through concessional financing and Public-Private-Partnership (PPP).
According to a dispatch from State House, the Konza project deal is worth Sh17.5 billion while the expressway project, by the China Road and Bridge Corporation, is worth Sh50 billion.
Konza City is part of the Konza Techno City, a Vision 2030 flagship project started in 2008 and aimed at developing technology-intensive and high-tech industries in ICT, biotechnology, and e-commerce.
It is estimated that Phase I of the project will create more than 17,000 jobs and contribute Sh90 billion to the Kenyan economy. This phase, which sits on 410 acres of land, is distributed into mixed-use (89 acres), university (39 acres), residential (26 acres), and life science (26 acres).
Others include office space (11 acres), retail (eight acres), cultural community (one acre), parks (79 acres), and transportation and public space (130 acres).
The Konza Technopolis Development Authority (KOTDA) in February this year revealed that laying of 500 kilometres of ICT cabling in Konza city had been completed, boosting efforts to open up the technopolis for private companies seeking to set up in the greenfield city.
The infrastructure is meant to attract investment by providing a ready-to-plug backbone ICT network. The project has also done 40 kilometres of powerlines, one main electrical station plus 50 sub-stations.
By February 2022, the technology city plans to complete horizontal infrastructure including design and construction of roads, parks, sub-services, water treatment plants, sewage treatment plants, and an automatic waste collection system. Others are a police station and fire station, a security feature as well as a transit hub covering 600 acres.