How blacklisted firms continue to win multi-billion tenders

An MPs' report has questioned the Government's award of Sh37 billion project to a Chinese firm that had been blacklisted by the World Bank.

A report on the Inquiry into the Status of Dams in Kenya has revealed how Water Ministry handed Sh37 billion for the Thwake Dam project in Makueni to China Gezhouba Group Limited.

The report by National Assembly Environment Committee indicates that the Chinese firm had been blacklisted by the World Bank over “procurement irregularity” but proceeded to win the multi-billion shilling contract.

PS overruled

The then Water Principal Secretary Patrick Mwangi had objected to the deal but was overruled after the Public Procurement Oversight Authority cleared the firm.

“China Gezhouba had been contracted to undertake the Thwake Dam project after being cleared by the Public Procurement Oversight Authority (PPOA) despite reservations by then Principal Secretary,” states the report tabled in Parliament.

The firm was also awarded by the same ministry the Sh6.8 billion Northern Water Collector Tunnel in Murang’a.

It is not the first time controversial firms are getting major deals with the Government.

During the sugar import saga probe in July, last year, it emerged that a firm that had been blacklisted from importing the commodity was allowed to ship it in.

Mombasa-based Hydery (P) Limited was allowed to import 35,000 tonnes of sugar despite being blacklisted by Parliament in 2013.

The Agriculture Committee of the eleventh Parliament blacklisted the firm after it was established that it imported 3,000 tonnes of sugar without a permit.

Hydery (P) Limited and Stuntwave companies had their licences revoked in a report titled The Crisis Facing the Sugar in Kenya.

Meanwhile, MPs want the Sh29 billion Itare Dam project taken away from the controversial Italian firm, CMC Di Ravenna, and have it implemented by another contractor.

The committee report says that the country risks losing billions should the contract remain in the hands of the cash-strapped Italian firm, which has since been declared bankrupt.

The Italian firm was also at the centre of Arror and Kimwarer multipurpose dam projects that saw Treasury Cabinet Secretary Henry Rotich and his Principal Secretary hauled to court and charged with corruption-related crimes.

The MPs have also recommended that all dam projects being implemented through the Engineering, Procurement, Construction and Finance (EPCF) contract model be stopped.

The team says the model has been used as a conduit to swindle billions of shillings from taxpayers.

“The Ministry of Water, Sanitation and Irrigation, together with the National Treasury should urgently put in place measures to have the works for the construction of the Itare Dam sub-contracted or assigned to another contractor so as to forestall the huge loss that may be incurred if the plant and equipment that is currently on site remains unused for a long time,” says the report tabled in the House.

The Kareke Mbiuki-led team said the ministry should, in its further projects, ensure proper background checks to protect the country from a similar scenario.

“Further, upon engagement of the contractor, the consultant should do continuous due diligence to ensure that the financial capacity of the contractor has not shifted in the course of the project life,” recommends the report.

Consequently, the committee has recommended that all dam projects at planning and procurement stages be suspended and proper background checks conducted on firms involved.

“The ministry must forthwith stop any of the procurement for all the dam projects that are planning and procurement stages and do a complete review of the technical and financial aspects for the projects to ascertain whether the country is getting value for money,” it says.

The team has also questioned State appetite to hire consultants for its numerous dam projects.

The team alludes that State officers could be using the provision to pilfer public money by hiring private consultants at exorbitant rates.

For instance, a firm is being paid Sh1.7 billion to consult in the construction of the Sh38.7 billion Thwake Dam while the consultancy fee for Itare Dam is Sh598 million.

“The ministry should engage its technical experts to consult for the numerous dam projects being implemented across the country to reduce the project costs incurred by the consultancy firms,” it recommends.

The team also recommended that the National Treasury and line ministries forthwith stop implementing any new projects through the EPCF model of financing.

The report says the model is associated with high costs, in which funds could be going into individuals' pockets.