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Tight deadline set for Kigali Convention Centre

Saturday August 08 2015
EAKCC

The Kigali Convention Centre is expected to be completed early 2016. PHOTO | CYRIL NDEGEYA

Rwanda has issued a strict deadline to a Turkish firm recently contracted to complete the multimillion-dollar Kigali Convention Centre, as it tries to minimise losses accumulated on the project that has been marred by delays for more than four years.

While details of the contract have not been made public, The EastAfrican has learnt that Turkish engineering firm Summa was awarded the contract in June on condition that the project is completed by the end of March 2016, failing which it will attract penalties.

About 200 Turkish workers have arrived in the country to work on the project. The government has also appointed a team to monitor the construction work on the site to avoid further delays.

READ: All roads lead to Kigali, the new events capital of East Africa

The four-year delay is expected to increase the cost of the project from the initial estimate of $300 million due to additional costs incurred by government mainly in form of accumulated interest fees as the project has mainly been financed through external borrowing.

The government spent $120 million from the proceeds of its $400 million Eurobond to repay an outstanding loan secured from Citibank, NA, London branch.

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Another $150 million that was expected to finance the completion of the project was kept unused by government for most of last year following a disagreement with Beijing Construction Engineering Group (BCEG), including concerns over the quality of the project.

The government eventually terminated the contract with the Chinese firm, and is now negotiating with the company to avoid litigation although it will still be required to compensate it.

“The opportunity cost associated with the delay is huge — it was supposed to be finished in time to host the annual meeting of the African Development Bank last year, but it was not possible,” a well-placed source familiar with the project told The EastAfrican.

He added that the government is incurring additional costs from hiring a new contractor through a process which was not very competitive.

“There were deadlines to meet — an open tender would take very long, only four companies were shortlisted. If you take on a project that has been delayed, if you have to accelerate the project, there are costs associated with the process,” he said.

The conference centre comprises a five-star hotel with 292 rooms, an information technology office park and a conference hall with the capacity to host 2,600 people, among other facilities.

Construction started in 2009 and the centre was expected to be complete by 2012. But lack of funds delayed its completion due to, among other things, reluctance of private investors to finance it, saying it was too ambitious.

However, Rwanda’s Minister of Infrastructure James Musoni sought to allay fears saying the cost of the project will be kept under control despite the delays.

“The biggest cost we had is time, the rest we think will be under control. There may be additional costs because of inflation; the cost of construction materials may have gone up for some items,” he said.

The Kigali Convention Centre is expected to boost Rwanda’s position as a conference destination.

The government has projected earnings of $150 million this year — from meetings, incentives, conferences and events — up from $42 million collected last year.

If completed on schedule, the convention centre is expected to host the annual Africa Hotel Investment Forum, the World Economic Forum on Africa and the African Union Summit.

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