NAIROBI – A 10-year debt involving Spanish companies that morphed into a diplomatic issue of interest between Kenya and Spain threatens to soil the bilateral relations.
The issue involves Sh1.2 billion owned to a Spanish company involved in the construction of the Lower Ewaso Ng’iro South River multi-purpose dam.
The delayed payment for the project with three dams, and three hydroelectric power stations with a total power of 180 MW risks costing the Kenyan taxpayer more than Sh230 million in fines.
Spanish company TYPSA in 2012 provided consultancy services for the feasibility study and detailed design for the Lower Ewaso Ng’iro South River Multipurpose Dam Development Project on a contract of Sh3.1 billion.
More than a decade later and despite numerous efforts at the business-to-business and at the highest government-to-government level, the money is yet to be dispatched.
Kenya has been struggling with pending bills to the tune of Sh727 billion, resulting in stalling of key infrastructure projects. Other foreign contractors who have been affected include Chinese and British companies. For instance, the Kenol-Sagana-Marua Road, which is being constructed by the Chinese has stalled due to lack of funds.
The Kenya-Spain debacle started when the Spanish Ambassador to Kenya wrote to different government institutions, intervening on behalf of the firm.
Please note, Honourable CS, that this issue is endangering future investments and operations of the company in Kenya, as well as the reputation of the government of Kenya
Ambassador Javier Garcia de Viedma
In one of the correspondence, Ambassador Javier Garcia de Viedma wrote to the National Treasury, reminding of the non-payment of the long-standing debts to the Spanish companies, and complaining that “despite the many efforts by the company and this embassy we still have not received any way forward on the issue”.
“TYPSA performed the work to the full satisfaction of the Kenyan authorities. Hence it is incomprehensible how much they are struggling to get the payment that they deserve,” the envoy wrote to then Treasury Cabinet Secretary Ukur Yatani.
Ambassador Garcia, who has since left the country after the completion of his tour of duty, warned that, the issue was endangering future investments in Kenya from Spain.
“Please note, Honourable CS, that this issue is endangering future investments and operations of the company in Kenya, as well as the reputation of the government of Kenya,” the Ambassador wrote on May 3, 2022, ahead of the visit by his Prime Minister, Pedro Sanchez, in October 2022.
Treasury CS Njuguna Ndung’u in a letter to Head of Public Service Felix Koskei said a verification of the pending bill had already been made and was found to be legitimate, clearing it for payment.
During the visit by PM Sanchez, the matter did not play out publicly even as President William Ruto committed to strengthen economic and investment relations between our countries, and that Nairobi “welcomes the interest of Spanish companies in various sectors including tourism, agriculture, infrastructure, water management and renewable energy.”
The matter was however discussed in the closed door bilateral talks because soon after the visit, President Ruto directed the debt be paid expeditiously.
“Following the recent visit of H.E. Pedro Sanchez, the President of the government of the Kingdom of Spain, that took place from October 25-26, 2022, H.E, the President of the Republic of Kenya, raised a concern over the pending payments and other issues with Spanish companies. And he directed they should be addressed expeditiously,” CS Ndung’u wrote to her then-Regional Development and EAC counterpart Rebecca Miano, who is now heading the Trade docket.
“In view of the foregoing and as per the President’s Directive, we wish to request your ministry to urgently prioritise, budget for and pay the said pending payments to the TYPSA, Spain, within the FY2022-23,” she said. The ministry was the contracting authority.
In her response, however, CS Miano said her ministry was unable to pay because “budget allocation for Regional Development has been very minimal over the years.”
The issue again found its way to the Kenya-Spain joint business forum in Madrid in April 2023, where Spanish Foreign Minister Jose Bueno raised the matter with Foreign Affairs CS Alfred Mutua over the debt.
Upon his return to Nairobi, CS Mutua to write another letter to Miano, asking her ministry to consider mutual beneficial relations between Kenya and Spain and other foreign countries.
But CS Miano stood her ground, arguing that her hands were tied as the ministry had no money and instead forwarded the matter Treasury CS and the Head of Civil Service.
Despite the clearance of the pending bill and the presidential directive, the debt is yet to be paid.
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