Taxpayers are facing a Sh390 million payout to an Indian consultancy firm that designed the multi-billion shilling Mwache Dam project at the Coast after the Attorney-General lost a legal battle over unpaid consultancy fees and interest.
The High Court ordered the government to settle a 14-year-old debt owed to Consulting Engineering Services (India) Private Limited for feasibility studies, designs and tender documents prepared for the flagship water project.
The court rejected the government’s attempt to disown the consultancy contract, ruling that signed agreements, project addenda, processed invoices and official correspondence proved the State had fully recognized and implemented the deal.
The award relates to consultancy services for the Mwache Multi-purpose Dam in Kwale County, a Sh20 billion flagship water project meant to ease chronic shortages in Mombasa city and surrounding areas and now targeted for completion in 2027.
The dam, co-financed by the government and World Bank, is expected to supply 186,000 cubic metres of water daily to the Coast region and support irrigation and flood control once completed.
While allowing a claim filed by Consulting Engineering Services (India) Private Limited, the court ordered the government to pay the firm $3,017,908 (Sh389.3 million), together with interest pegged on the London Interbank Offered Rate plus two percent.
The court ruled that the Ministry of Regional Development Authorities had entered into a valid consultancy contract with the firm but failed to honour payments.
Court records show the ministry awarded the consultancy tender to the Indian firm on May 31, 2010, at a contract sum of $4.3 million for feasibility studies, detailed designs and tender documents for the Mwache Dam project.
The contract was later revised upwards through two addenda. The first addendum, signed in 2012, introduced additional irrigation works worth $431,346 while the second, signed in 2013, added services linked to World Bank sponsorship valued at $1.24 million.
The consultant told the court it completed the feasibility report in September 2011 and later submitted final study reports and tender documents in February 2017. It said it raised 19 invoices under the contract but the government only paid eight invoices amounting to half the contract value, with the last payment made in December 2012.
The company accused the ministry of ignoring repeated payment demands despite several written acknowledgments admitting the debt.
In defence, the Attorney-General and the ministry denied the existence of a valid procurement contract and argued that no lawful tendering process had been undertaken.