NSSF stands to lose billions for stalled projects
The National Social Security Fund (NSSF) stands to lose billions of shillings from three stalled projects according to the fund’s audited accounts for 2015.
At risk is Sh2.23 billion that the NSSF has already paid out to contractors of the Hazina Trade Centre, the Nyayo Embakasi phase six project as well as the illegal transfer of NSSF’s land in Upper Hill.
In the case of the Hazina Trade Centre, the National Social Security Fund has already paid the contractor Sh1.9 billion, but the project stalled due to a dispute with retail Chain Nakumatt.
According to Auditor General Edward Ouko, the continued delay of the project which was expected to be complete by the end of 2016, will likely lead to increased construction costs and compensation claims.
The delay stems from an ongoing legal tussle with retail chain Nakumatt.
Part of the construction of the 38 story building includes the strengthening of columns found inside Nakumatt Lifestyle, one of the tenants in the building.
The protracted tussle has led to the scaling back of the project despite funds being allocated to complete the building this year.
“Further the continued stalemate may lead to escalation of costs due to legal suits filed by Nakumatt Holdings and possible claims for compensation by the contractor,” Mr Ouko said in his audit report.
The Auditor General has recommended that NSSF take legal action against Nakumatt to secure contributors funds.
The audit also reveals that NSSF also stands to lose Sh215.5 million paid to the contractor of the Nyayo embaski estate after the project staled after the Nairobi City County failed to grant the necessary approvals.
Of the 324 housing units to be constructed, only 52 have been completed.
“By the time of stoppage, the contractor had been paid an advance fee of Sh215.5 million against a bank guarantee from the Standard Chartered Bank which expired on 30 September 2015. The contract period had also expired on 30 November 2014,” the audit report indicates.
The state pension fund has also been unable to fully verify the accuracy of its un-developed land banks which it values at Sh9.4 billion.
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