How bureaucrats, politicians steal billions through tender cancellation

In ordinary business transactions in the private sector, a single botched contract that causes the company to suffer huge penalties would see heads rolling pretty fast, with a potential for recovery of lost money. Yet in the government, cancelling contracts with the attendant costs being borne by the taxpayer has been turned into a sport.

New administrations at both the national and county governments would cancel a contract on very flimsy grounds, only to re-tender the same project months later, sometimes at a higher contract price.

They would sound philosophical at the point of cancellation with what seems to be valid questions on the soundness, viability or procedural flaws of the project and a desire to protect taxpayers money.

However, when the same project re-appears for a fresh tendering, no answers are ever given as to how the earlier arguments advanced to justify the cancellation mysteriously vanished and the project reverted back as a strategic public investment. The National Treasury then quietly enters into a negotiation process to clear the associated contract penalties, often paid under Article 223.

By the time the public gets to learn of those huge penalties, the project would have long been cleansed and lined-up for new contractors with connections and friendly to the administration in office. In certain instances, the same administration would cancel a project simply because the “right” people are not the ones in the feeding trough or because the appointed political heads have changed either in a Cabinet or administrative reshuffle.

When one does a casual google search for projects that Kenya has been heavily penalized for contract cancellations, the following projects easily popped up: the Rironi-Mau Summit project where at least Sh6.2 billion penalties were paid to the French contractors earlier awarded the contract and the Adani power deal indicates that the taxpayer may suffer losses of up to Sh7.3 billion following its cancellation.

A few weeks ago, a letter seeking approval of about Sh350 million in legal fees was circulating on social media in relation to the twin airport deal with the same Adani contractors, indicating a separate legal dispute over the Privately Initiated Proposal (PIP) for Public Private Partnership ( PPP) for the Airport.

Within the same Internet trail, an estimated Sh8.9 billion (US$68 million) has been paid to Anhui Civil Engineering Group (ACEG) and China Aero Technology Engineering Corporation for what is listed as illegal termination of the Greenfields project that sought to build a second terminal at the Jomo Kenyatta International Airport. At the point of cancellation of the contract by the Uhuru Kenyatta administration, the project was considered as lacking in commercial viability.

With the exit of the Uhuru Kenyatta administration, the Adani Group appeared suddenly with a PPP offer hailed as a game changer by President Ruto’s administration. In a rare act of casting his lot with the government, the presumed leader of the opposition, the late Raila Odinga not only supported the Adani proprietors, but seemed to defend the project until his sunset weeks ago.

Curiously, President Ruto was back at the airport deal championing and seeming to line it up for United Arab Emirates (UAE) investors this past week. He chided his own electorate for suffering from a problem of being of average minds for opposing the airport expansion project.

It is barely a year since the President yielded to a deadly public revolt over his punitive tax measures and this opaque type of contracts. One cannot fail to wonder what is it in these PIP-PPP contracts? Or who are the real faces behind the foreign investors lined before taxpayers?  

The CMC Di Ravenna contract for the Arrow and Kimwarer dam projects indicates that an arbitration case seeking at least Sh12.4 billion in compensation for contract cancelation was filed. Formally, the government of Kenya is in default of the associated public debt of Sh19.6 billion, with billions more already lost in advance payment and insurance premium. The contractor filed for bankruptcy back in 2021.

Technically, that means there is no hope of the company ever returning to the project site for resumption of the stalled work. Yet, in a recent Cabinet dispatch, the current administration has opted for opening negotiations with the contractors to resume works in the project instead of the protracted legal dispute that puts Kenya’s assets overseas at risk.

A familiar storyline is emerging for the latest kid on the block: the contract cancellations over the High Grand Falls Multipurpose Dam project estimated to cost Sh337 billion.

An AI overview over the project controversy indicates the National Treasury cancelled the project in July 2025, but for reporting purposes, it was formally cancelled in September 2025. Reasons given for cancellation are said to be a finding that the privately initiated proposal did not meet the threshold for a PPP and feasibility concerns.

While the National Treasury has picked the familiar tagline of no public money lost as the project contract hadn’t been signed, there are traces of evidence that there exists a legal dispute over the project. The contractor, the UK based GBM Engineering and her partners Power China and RCP Irrigation, is claiming unfair removal, seeking up to Sh10 billion in damages. From earlier precedents, we all understand how this story will eventually end, just like its cousins before them.

Behind the façade

Analytically, a good economist will look at the numbers, trends or patterns and ask: are there any dots connecting what is visible from the optics of the available evidence? Or could there be something else not obviously visible behind the façade?

Think about it. From the few projects listed above, potentially close to Sh45 billion of taxpayers' money has either been lost or is at risk of loss for no work done at all in the last 13 years alone.

The majority of the people in government today, including the President, served in the immediate previous administration that signed some of the now-canceled projects, meaning they were either party or sat in forums where decisions to approve these projects were made.

Corruption cases associated with these projects eventually collapse after dragging among the various investigative and prosecutorial agencies. Sometimes, these agencies will go after each other in a blame game over the handling of the high-profile cases. The people who signed these contracts never get to explain to Kenyans what they know or did to occasion such huge losses to the taxpayers.

Tragically, the oversight of Parliament collapses as soon as the cameras shut down at the Public Accounts or Investments Committees that get to handle the audit reports from the Auditor General or questions raised by the Controller of Budget over the waste.

In addition, the Public Procurement and Asset Disposal Act of 2015, and the accompanying regulations of 2020, have laid down adequate safeguards for government contracting procedures. The PPP Act of 2021 seems to have created a loophole to bypass these stringent guidelines for what is now emerging as a conduit to siphon funds from public coffers under PIPs.

All these vendor driven projects seem to have a clear pattern, evolving with successive administrations. What is evidentially true is that this commandeering has created billionaires with no known inventions in the country.

What then becomes of the clarion call for a Singapore or UAE of Africa? Is this how first world economies are built?