GALANA KULALU IRRIGATION DEVELOPMENT PROJECT

Introduction

The Galana Model Farm which covers 10,000 acres contract was awarded to Green Arava of Israel at a contract sum of KES 14,545,106,963.00 on September 2014.The contract was later revised to KES 7,294,853,036.00 after deferment of some items.

The contract was for a duration of 30 calendar months and was expected to be completed in March 2016, whereby the contractor was expected to complete construction/installation of irrigation infrastructure within 18 months and test the system during defects liability period of 12 months. The contract was later extended twice and was expected to be completed by 20th January 2018 but the works are still not complete with the completion estimated to be 85%.

The contracted components of the contract are the following;

  1. Construction of 2 No. intakes on river Galana and installation of conveyance pipelines and Installation of 24 No. centre pivot irrigation systems for maize covering 4,000 acres.
  2. Installation of drip irrigation systems for maize covering 6,000 acres
  3. Construction of a logistics center that would house the maize mill, driers, garages, offices, training centers among others.

In December 2015, a commercial loan of KES 6.35 billion was signed with Bank Leumi of Israel to finance the contract whereby KES 5.509 billion was to meet the cost of the contractor payment certificates and KES 841,501,428.00 was to cater for loan insurance (Ashra). Before the loan became effective, KES 2.55 billion from GOK had been spent to pay the contractor.

Image
Image
Progress of Works

The implementation status of the project is 85% for the implementation of the irrigation infrastructure and 51% for the overall irrigation area achieved. To-date the following has been achieved;

  1. Construction of 2 pumping stations and installation of 8 No. pumps (5 pumps have been supplied but not installed.
  2. Installation of 20 No. centre pivots covering 3,300 acres, tested and handed over
  3. Installation of drip irrigation system covering 1,800 acres, yet to be tested
  4. Construction of 1 No., 45,000 cubic metre water pan and on farm pumping station whereby 6 pumps have been installed
  5. Construction of tractor shed and store
  6. Supply of 85% of assorted machinery and equipment to support production

Floods April 2018

The floods brought about by the heavy rains affected the intake through river wandering. The Contractor proposed to correct the situation using 700 Million but NIB declined and moved in to correct the situation to ensure crop production resumes at minimal cost of 34 Million. The works are now complete and the river flow is now supporting the current crop production.

Crop Production

The contractor has produced maize in Galana and sold to the County Government of Kilifi, National Produce and Cereals Board and State Department for Special Programmes and revenue realized valued at KES 298,427,337.55 of which KES 172,740,947.35 has been settled while outstanding amount to be settled is valued at KES 125,686,390.20 as tabulated below:

Period Area Average yield (90 kg bags per acre) Yield (90 Kg Bags) Remarks
April 2015 – October 2015 500 17 8,557.00 First Trials
September 2015 - January 2016 500 6 3,101.00 El-Nino affected yield
April 2016 – October 2016 2000 31 59,066.00 Best variety combination
March 2017 – to date 2145 20 38,535.00 Challenges from delayed payments
TOTAL 5145   109,259.00  

In order to ensure continuity in crop production, NIB has embarked on crop production on the 3300 acres handed over and already 500 acres of land planted and 1600 acres prepared

PAYMENTS TO THE CONTRACTOR

  • Total payment to the contractor is KES 6,107,113,350.23
  • KES 2,555,917,049.55 is GOK
  • KES 3,551,196,301.09 from the Loan of Bank Leumi.
  • A total of KES 2,471,581,982.74 of the Loan has not been utilised.
  • Signed contractor funds not utilized - KES 1,187,739,685.77.

PENDING WORKS

The value of the pending works is Kes 989,452,154.13 as summarized below;

No Description Amount
1 Installation of 4 Centre Pivots 61,553,079.97
2 Construction of reservoir 53,125,583.00
3 Other reservoir infrastructure 101,243,089.00
4 Supply of 26 pumps for the two reservoirs 76,186,444.53
5 Supply of generators 43,574,400.00
6 Installation of drip 617,346,557.63
7 Construction of Office 18,423,000.00
8 Construction of Storage 18,000,000.00
    989,452,154.13

FACTORS CONTRIBUTING SLOW RATE OF IMPLEMENTATION

The following factors have contributed to slow rate of implementation of the project;

  1. Slow rate of implementation of the contractor- the contractor is slow in implementation and he lacks capacity and he mostly relies on advance payment for him to import machinery and equipment needed for installation in the site
  2. None compliance of the contractor to conditions of contract by the contractor- the contractor has refused to comply with instructions issued under the contractor especially on fixed rates for additional works done under the contract

WAY FORWARD

The National Irrigation Board plans to do the following as a way forward

  1. To disengage from the contractor and engage other firms to complete the remaining works valued at Kes 989 million. NIB wrote both to the AG and The National Treasury (TNT) seeking opinion on this proposal and a report has been prepared and submitted to the CS Ministry of Agriculture, Livestock, Fisheries and Irrigation by a team composed of officers from the AG, TNT, State Department for Irrigation and NIB on the various options and the way forward. The team has already prepared a report and submitted to the appointing Authority.
  2. The contractor has not renewed the Performance Guarantee despite being instructed by Employer and therefore NIB has issued a 14-day notice of termination to the contractor for the default. The Performance Guarantee valued at 97 Million has also been called by Employer. NIB will then move to site and takeover the works without releasing the contractor of his liabilities, upon expiry of the notice.
  3. Consult the line Ministry to Handover the completed sections measuring 3,300 acres to ADC or the NYS for production and as the remaining area of 6,700 acres is being completed for eventual handover.
  4. Eventually handover the other uncompleted sections of the farm to ADC for production as soon as they get completed.

Please publish modules in offcanvas position.