Works stoppage at Hazina centre to cost pension savers

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Delays in releasing a report on the structural integrity of Hazina Trade Centre in Nairobi risks sinking workers’ hard-earned retirement savings invested in the stalled building by the National Social Security Fund.

Works to build an additional 36 floors to the existing three-floor structure stalled in September 2014 after Nakumatt Supermarket, the anchor tenant, was granted court orders stopping construction of the tower. 

The State-backed pension scheme later mid-last year sought an audit report on the soundness of the building’s foundation and beams to hoist a 39-floor structure from the buildings inspectorate.

“We are still waiting for the opinion from the Public Works ministry before we take next course of action,” said NSSF acting managing trustee Anthony Omerikwa.

The pension scheme was eyeing higher returns from the upgraded Hazina Trade Centre, which would offer commercial space for both retail and offices given its prime location in the city centre.

The High Court order was lifted in January this year, paving the way for NSSF to continue building.

NSSF in February 2013 awarded China Jiangxi the tender to construct the additional floors at a cost of Sh6.71 billion.

Construction began in June that year and was to be undertaken in 155 weeks with an expected completion date of July 2016, says a report by Auditor-General Edward Ouko.

The supreme audit officer now warns that stoppage of works is likely to result in higher project cost, putting at risk workers’ contributions.

“The continued stalemate may lead to escalation of costs due to legal suits filed by Nakumatt Holdings Ltd and possible claims for compensation by the contractor,” said Mr Ouko who issued a qualified opinion on NSSF’s latest books of accounts to June 2015.

At the time of stoppage of building works, NSSF had already paid China Jiangxi a total of Sh1.9 billion. By that time, the builders had reached the 15th floor.  

Nakumatt had argued in court that the construction was disrupting its business; and questioned whether the structure’s beams could support a skyscraper of such magnitude.

In a dramatic twist, the National Assembly’s Public Investments Committee in February opened contempt proceedings against Nakumatt chief executive Atul Shah after he failed to disclose to lawmakers that the earlier temporary court orders against building Hazina Trade Centre had been lifted.

The headwinds hitting the upgrade of the trade centre becomes the latest NSSF housing project to attract audit queries.

Workers also risk losing more than Sh215 million in a stalled housing scheme located in Nairobi’s Embakasi area dubbed Nyayo Embakasi phase six whose building came to a halt due to lack of approvals from the county government.

Chinese firm China Jiangxi is said to have already left the construction site having built only 52 units out of the planned 324 mix of apartments and maisonettes which were to cost a total of Sh2.15 billion, according to an audit report.

The retirement scheme also risks losing another Sh115 million in a phony land deal for a prime plot located in Nairobi’s Upper Hill area whose title deed has now been revoked, according to the Auditor General.

Other audit queries raised by the auditor general relate to collecting Sh748 million from unknown contributors, and wasteful spending that saw NSSF spend half of workers’ contributions collected in 2015 for administrative expenses.

NSSF’s bulging waistline saw returns to pensioners shrink to an all-time low of 3.0 per cent as at June 2015 from 12.5 per cent in 2014.

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