In a bid to settle the turbulent waters of the Arror and Itare dam controversy, Kenya's Cabinet has greenlit a negotiated settlement, leaving the nation saddled with hefty financial burdens.
The decision, reached on Tuesday, April 23, points to the government's commitment to press on with the construction of these dams, despite a history marred by allegations of corruption and mismanagement.
The agreement comes amidst a cloud of uncertainty regarding the exact amount Kenya will be obligated to pay to the Italian construction giant, CMC de Ravenna, contracted for the projects. Though the figures remain undisclosed, a Cabinet dispatch confirms the government's intent to pursue a court settlement.
Under the new terms, the construction of the Ksh34 billion Itare Dam is set to resume, while groundwork for the Ksh38.5 billion Arror Dam will commence. This move marks a determined effort by President William Ruto's administration to breathe life into projects that have languished in controversy for years.
Last year saw Kenya and Italy enter renegotiations over the Ksh19.8 billion loan earmarked for the Arror and Kimwarer dams, following their cancellation by former President Uhuru Kenyatta. President Ruto, in talks with Italian President Sergio Mattarella in March 2023, spearheaded efforts to revive these ventures, despite previous setbacks.
The projects ground to a halt amid allegations of inflated costs and irregular procurement practices, as highlighted by the Director of Public Prosecutions. President Ruto's administration has since aimed to navigate the legal hurdles obstructing progress, freezing payments amidst fraud allegations.
Former Treasury Cabinet Secretary Henry Rotich found himself at the center of the storm in July 2019, facing charges related to his alleged involvement in defrauding the government during the dam projects' implementation. Rotich's acquittal in December 2023 did little to quell concerns over the mismanagement of funds.
Despite substantial advances made to offshore entities for the Arror and Kimwarer projects, neither dam materialised. Kenyatta's decision to cancel the Kimwarer project and proceed with Arror at reduced costs reflected a desperate attempt to salvage the situation, albeit fraught with legal complexities.
Legal battles loom large as Kenya pursues suits against Italian firms while facing counter-suits from contractors. Three Italian companies have taken their grievances to the International Court of Arbitration, contesting what they deem as unlawful project cancellations.
Amidst these challenges, Kenya defaulted on its Ksh19.6 billion loan, triggering concerns over its financial obligations. Treasury documents reveal outstanding payments, further complicating the nation's fiscal predicament.
Allegations of irregular offshore payments have further muddied the waters, with Rotich accused of facilitating illicit transactions with an Italian insurance firm. Prosecutors contend that these actions were aimed at greasing the wheels of corruption, undermining due process.
Questions also linger over the financial viability of the contractor, CMC Di Ravenna-Itinera JV, amidst allegations of bankruptcy despite hefty advance payments.
