Absa Kenya’s Pursuit of Increased Reimbursement for Highway Land Expansion Rebuffed

by | May 16, 2023 | Business, News | 0 comments

In a notable defeat for Absa Kenya, the bank’s attempt to increase the compensation for its Changamwe, Mombasa County property, acquired by the Kenya National Highways Authority (KeNHA), was rejected. Initially compensated Sh68.5 million in 2018, the bank sought a revised valuation of Sh132 million for the land, which was seized to expand the Mombasa-Nairobi highway.

Absa Kenya, formerly known as Barclays Bank of Kenya, instituted legal proceedings against the National Land Commission (NLC) and KeNHA, claiming that the original compensation was significantly lower than the prevailing market rates.

The financial institution had requested that the valuation of its land, which included a building subsequently razed to make room for the highway expansion, be revised upwards to Sh132 million.

However, Environment and Land Court Judge Sila Munyao discarded the petition, stating that the bank’s valuation report was not credible.

“The assessment done by Tysons Limited in August 2015, about two years prior to the proposed compulsory acquisition of a segment of Absa’s property and prior to KeNHA demarcating the land to determine its size, is not dependable and insufficient to contest the NLC’s valuation, which served as the basis for the compensation,” ruled Justice Munyao.

Absa Kenya had also demanded KeNHA to pay 14 percent annual interest until the settlement date. The bank, the registered owner of a tract of land in Mainland North housing its Changamwe Branch, was approached by KeNHA in 2017 with plans to convert the Mombasa-Nairobi highway into a dual carriageway.

According to Absa, the compensation was not only unreasonable but also illegal, as it failed to acknowledge the value of the land and infrastructure that were demolished for the highway’s construction, a requirement under section 113(2)(a) of the Land Act.

Absa further argued that the NLC, acting on behalf of the government, neglected to include a 15 percent statutory disturbance allowance. The bank asserted that the award was neither fair nor just as required by section 111(1) of the Land Act, insisting its March 2017 valuation report, which placed the property’s value at Sh132,050,000, had considered all pertinent factors.

KeNHA admitted to inaccuracies in the land measurement of some properties, issuing a correction in a gazette notice on January 12, 2018. Meanwhile, the NLC defended its actions by stating it inspected the property in March 2017 to ascertain the scope and character of the development and the planned road corridor.

The NLC deemed the original Sh68.5 million compensation fair and just, including the cost of the land, subsequent improvements, and a 15 percent disturbance allowance. It countered Absa’s claim of inflated land prices, arguing that the bank’s valuation of Sh146 million per acre far exceeded the area’s market value of Sh70 million.

“Absa Kenya has not successfully substantiated its allegations against the defendants to the requisite standard, and therefore the lawsuit is dismissed,” decreed Justice Munyao.

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