This archive report was first published on 24 December 2019.
Published on December 24, 2019, a suit filed by the National Irrigation Board (NIB) against Kenya Commercial Bank (KCB) has revealed that India's IVRCL, the firm hired to complete construction of the Bura Irrigation Scheme, has collapsed before finishing the job.
The Bura Irrigation Scheme, one of Kenya's oldest scandals, has been plagued by administration after administration pumping billions into the project for the last 42 years, but with completion nowhere in sight.
IVRCL's collapse has left taxpayers exposed, with the NIB seeking to recover Sh1.1 billion in guarantees obtained by the contractor in 2013 before starting work on the project.
The National Irrigation Board (NIB) hired IVRCL in 2013 in a deal that required the Indian firm to provide guarantees from a Kenyan bank before being advanced any money to start work on the project.
Construction was to take 30 months and cost Sh7.3 billion, but six years later, not much has happened on the Tana River County project.
IVRCL's lenders, India-based Canara Bank, asked KCB to issue a guarantee to the contractor on its behalf, but IVRCL quietly obtained a court order barring the NIB, KCB, and Canara from cashing the guarantees in June 2015.
IVRCL was determined to be a lost cause, and liquidation proceedings started on February 23, 2018.
“Under the terms of the performance guarantees, KCB undertook to pay upon the NIB’s first written demand and without cavil or argument and without needing to prove or to show grounds or reasons for demand pay the sums specified in the guarantees,” NIB deputy general manager Raphael Ogendo says in court papers.
