The Kenya Airports Authority (KAA) faces pressure to pay Sh13.8 billion as contractors and the taxman push it to settle claims on unpaid taxes and contract breaches leading to the stalling of several projects.
By the end of June last year, the Authority acknowledged the claims as part of its contingent liabilities, after several courts ruled against it, even as other pending court cases where different companies are demanding hundreds of millions of shillings in compensation portend more fiscal burden.
In its 2022/23 annual report, KAA notes that it is currently before the Attorney-General with the Kenya Revenue Authority (KRA), which submitted a tax assessment claim of Sh4.2 billion on air passenger service charge (APSC) for the years 2014 to 2016.
“The authority has objected to this tax assessment on the grounds that APSC is a statutory charge collected by KRA and remitted to KAA and is therefore not subject to tax. KRA has informed that they have soought for calendar of mediation meetings from the Attorney General's Office for all matters withdrawn by the State Agencies,” KAA notes.
In disputes with several contractors, KAA went to High Court for rescue, after arbitration tribunals awarded two contractors more than Sh600 million for contract breaches.
In one of the matters, which is now before the High Court, emergency sourcing and supplies firm, Relief & Mission Logistics, is seeking to be paid Sh719.7 million as compensation for the termination of the contract for concession agreement for passenger transfer services at JKIA in May 2015.
The KAA went before the High Court following a Sh221.7 million arbitral award to the company, which remained unpaid by June 30, 2023.
“The Attorney General's legal advisory was issued on 3rd May 2021 advising the authority to set aside the award. The authority has filed an application at the High Court to challenge the award and seeking to set aside the same,” KAA notes.
In another matter, a tribunal also awarded Baseline Architects Ltd Sh404,870,293 in 2013, though KAA has been fighting the ruling since, asking the High Court to set it aside.
Germany-based manufacturer of tents and temporary buildings, Roder Hts, is also claiming Sh156 million for unpaid works, extension of time, demurrage charges, and interest on delayed payments. The arbitration proceedings are yet to commence.
This is besides a Sh2.4 billion claim by professional, confidential bookkeeping services firm, Catic, “relating to works done on JKIA's apron stands, arrival and departure terminals (TIA) and interest thereon” KAA notes.
KAA also notes that it faces the risk of paying Sh766.25 million in a case with Mitu Bell, a welfare society, over the eviction of thousands of families from Mitumba Village, which was located near Wilson Airport, in 2011.
