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March 15, 2019
Road Tender Fight
End tender fight for road project
THURSDAY, MARCH 14, 2019 19:48
Two international investors are engaged in what promises to be an explosive battle over the lucrative $1 billion contract for building of the 175 kilometre Nairobi-Nakuru- Mau Summit Highway under the so called Public Private Partnership (PPP) deal.
On one corner of the ring is a consortium led by French group Vinci Meridian and on the other a consortium led by a Portuguese group that also includes French players, dubbed Rift Valley Connect (RVC).
Already, RVC- on being informed that the Kenya National Highways Authority (KeNHA) has decided to give the contract to their competitors - has moved to lodge a complaint with the Public Private Partnership Petition Committee, the entity that listens to grievances lodged by parties who feel cheated.
It is not a good sign at all because this matter may drag in litigation and contestation for months. If I were asked to mention the greatest drawback to implementation of PPP projects in Kenya I would say delays from unending litigation.
The situation has been made worse by inbuilt weaknesses in a procurement regime and system that puts too much emphasis on too many inane rules, procedures, documentation and notices.
With the emphasis on process, rather than bigger issue of public interest such as value for money and the fact that we badly need a new road through the most important transport corridor in East Africa, it is very easy for the contracting authority or even the competing contractors to commit slip ups and lapses in the interpretation of rules.
Instructively, the major cause in the current dispute is a mundane disagreement over the interpretation of income tax laws.
That since both consortia - in preparing their financial bids- contravened the Income Tax Act of Kenya, the two bids should have been rejected. I do not want to discuss the merits or demerits of the matter because the issue is now before a tribunal.
But there are broader policy questions that this dispute raises. If you asked me, I will tell you that what I want are PPP procurement systems that work for Kenyans. The present regime was designed so that we spend taxpayers’ money paying the army of consultants that must be hired for these transactions.
And, they come in different shapes. Transaction advisers, PPP specialists and even the big audit firms all queue at the Exchequer’s trough.
I hope that this important project will not be held hostage by unending litigation. Under the present arrangement, the PPP tribunal must dispose of the dispute in 10 days.
In litigious Kenya, it does not work. A good procurement system must deliver speed, finality and cheapness. But we have an arrangement that works like a casino.
When – as a contractor- you lose at the PPP tribunal- you double your stakes and take your case to the High Court. When you lose there, you triple your stakes and escalate the matter to the Court of Appeal. A number of PPP projects have not been able to move after intervention by the Ethics and Anti-Corruption Commission that is also not famous for disposing of matters expeditiously.
If the disappointed contractor still ends up losing in all these players, they have the leeway of sponsoring parliamentary inquiries. In Kenya, some disappointed contractors resort to sponsoring civil society organisations and non- state actors to litigate over procurement matters on their behalf.
One of the very first cases to be heard by the PPP tribunal was a case filed by Kituo Cha Sheria, challenging the constitutionality of the appointment of members of the tribunal. It was no coincidence that this matter came up just as the PPP tribunal was preparing to hear what turned out to be a politically explosive concessioning of the second container terminal at the Mombasa Port.
The Northern Corridor is the busiest and most important highway in East and Central Africa, the gateway from Mombasa to several countries. If I were the one making decisions, I would call the two winning bidders to a conference and see whether they can reach some form of accommodation. We don’t need litigation. We badly need that road.