A major cost question surrounding the Raila Odinga International Stadium has shifted to how a project initially placed at Sh35 billion ended up with a Sh45.848 billion contract, with the government saying the difference was driven by expenses that only became clear during the actual construction stage.
Sports Principal Secretary Elijah Mwangi said the first figure was drawn up as a concept by University of Nairobi Enterprise Services (UNES) and was not based on the full costs that would come with hiring a contractor to undertake the works.
“The designs of this Raila Odinga Stadium was done by the UNES, that is University of Nairobi Enterprise Services. It was just a concept, and from the concept, the initial concept which they designed was costing to around the figure of 35 billion,” Mwangi said.
According to Mwangi, the transition from the initial design stage to an active construction contract brought in several expenses that had not been included in the first figure.
“For you to do the actual construction, there are other factors that had not been considered, mostly the taxes. So a contractor will have to pay taxes: the VAT, the withholding tax, and of course when you are importing, you'll have to pay the freight charges, the clearing charges,” he said.
His remarks come after the Auditor-General questioned the Sh10.848 billion difference between the amount approved by the National Treasury and the value of the stadium contract.
The National Treasury had approved Sh35 billion, while the contract value stood at Sh45.848 billion. The Auditor-General said the additional amount was not backed by adequate documentation, raising questions about how the variation was arrived at.
The audit also raised concerns over the procurement process used to award the project. It questioned the decision to use direct procurement and noted that the Attorney-General's clearance for the contract had not been made available for audit.
The matter later came before the Senate, which sought explanations on the rise in the project's cost, the procurement method and the financial arrangements behind the development.
Sports Cabinet Secretary Salim Mvurya had earlier explained that taxes, levies and costs linked to bringing materials into the country contributed to the higher figure. Senators, however, questioned why those expenses had not been included when the original project cost was prepared.
Mwangi said the difference was also linked to the fact that the government chose to have the work carried out by a contractor rather than undertaking the construction itself.
“You may decide to contract. When you contract, you'll have to pay taxes to the contractor. If you do it yourself, you are not likely to pay taxes because there's no value addition,” he said.
He said the contractor's tax obligations had to form part of the final amount because the project was not exempt from taxation.
“Because the government gave it to a contractor, the contractor had to pay taxes. From the 35, we had to consider the taxes that the contractor would pay because it is not a tax-exempt venture and that's how the difference came.”
The government has therefore linked the higher contract value to the costs that came with moving the project from a consultant's initial concept to actual construction.
However, the Auditor-General's position remains that the Sh10.848 billion variation lacked enough supporting records. The audit finding has kept the focus on whether the additional amount was properly supported and explained.
The procurement process has also remained under scrutiny, with the audit questioning the use of direct procurement and the absence of Attorney-General clearance for a contract valued above Sh5 billion.
The stadium, first known as Talanta Sports City and now renamed Raila Odinga International Stadium, is being constructed at Jamhuri Sports Complex in Nairobi. The facility has a planned capacity of 60,000 people and is expected to serve as one of Kenya's venues for the 2027 Africa Cup of Nations.
Mwangi said construction of the main stadium had reached about 95 per cent completion. Other works linked to the project, including a railway station and roads connecting the facility, are still in progress.
The government has maintained that the Sh10.85 billion increase was not simply an unexplained rise in the construction price, but resulted from taxes and import-related expenses that were absent from the first estimate.
The explanation has not, however, settled the audit concerns, with questions still hanging over the documents used to support the variation, the procurement method and the missing Attorney-General clearance.