Heed AG’s advice and stop these opaque state-to-state agreements

President Uhuru Kenyatta flanked by Deputy President William Ruto and Cabinet Secretaries addressing the press on the Standard Gauge Railway project at State House, Nairobi on January 28, 2013. PHOTOE/VANS HABIL 

In Summary

• The following facts are irrefutable. First, it is China Roads and Bridges Corporation which conducted the feasibility and preliminary designs for us. When you allow a contractor to do for you designs and feasibility studies, he has an upper hand in deciding the price.
• Indeed, this project was going on very well until Dr Njiru wrote this famous letter directing Mr Muli to discontinue the feasibility study and designs he was preparing to conduct on the grounds that China Roads and Bridges Corporation had offered to do feasibility studies and preliminary designs for the Ministry of Transport for free.
• Yes, the Chinese have lent us money. But the loans have ended up tying ours hand to an opaque procurement method which is open to manipulation by their well-connected local backers.

By Jaindi Kisero
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President Kenyatta has challenged critics of the standard gauge railway project to speak out and produce any evidence of wrongdoing to the parliamentary committees investigating the matter.

In this spirit, I write as follows. The manner in which the procurement of this massive project was conducted was not only opaque but has left us widely exposed and dependent on the precarious benevolence of the Chinese contractors.

We do not know whether we are going to get a railway at the right price.

The following facts are irrefutable. First, it is China Roads and Bridges Corporation which conducted the feasibility and preliminary designs for us. When you allow a contractor to do for you designs and feasibility studies, he has an upper hand in deciding the price.

I would have been less worried if the Chinese were building for us a road, a library or a hospital because we have local experience in building roads and hospitals.

Local engineers are capable of seeing through the tricks introduced by foreign contractors to inflate prices and pad certificates with money for backhanders.

The problem in this case is that we have no local engineering experience in building railways and therefore possess inadequate capacity to interrogate the prices offered by the Chinese.

Secondly, I have seen a copy of the commercial contract which the Chinese signed with the Kenya Railways Corporation in July 2010.

TERMS OF REFERENCE

The document shows that the contract was signed on the basis of a non-binding bill of quantities. Ask any engineer to tell the implications of such an arrangement and the risks involved.

Clearly, we have exposed the taxpayer to far too many risks. When did the rain start beating us?

I trace it back to a March 2011 letter by former Transport Permanent Secretary Cyrus Njiru to former Kenya Railways Corporation managing director Nduva Muli.

Indeed, this project was going on very well until Dr Njiru wrote this famous letter directing Mr Muli to discontinue the feasibility study and designs he was preparing to conduct on the grounds that China Roads and Bridges Corporation had offered to do feasibility studies and preliminary designs for the Ministry of Transport for free.

By asking Mr Muli to suspend the government-funded feasibility study, we lost out in the information to safeguard the State’s interest during negotiations with the Chinese.

Independent feasibility studies and designs would have given us the estimated cost of constructing the railway and the financing modalities.

Yesterday, I went to my archives to look at the correspondence between Kenya Railways Corporation and the Transport ministry on this matter.

What comes through clearly is that our own railway engineers blew the whistle from the outset, warning not only that the feasibility studies and designs by the Chinese were way below standard but also that the route the government had taken was the wrong one.

Our engineers noted that even if the Chinese were offering to do feasibility studies for free, Kenya Railway engineers should have been allowed to spell out the terms of reference.

Our engineers also warned that the Chinese designs had included too many bridges, tunnels and crossing stations whose effect was to push the construction cost off the line. We did not listen to them. Apparently, the Chinese had powerful friends in high places.

TIED TO LOANS

As things stand, we are in the dark and remain at the mercy of the Chinese and their backers. What, really, is a government-to-government deal and how beneficial is it? 

Yes, the Chinese have lent us money. But the loans have ended up tying ours hand to an opaque procurement method which is open to manipulation by their well-connected local backers.

In the build-up to the last General Election, the Canadians offered us government-to-government deal on the Biometric Voter Registers. At the end of the day, all the money we used to purchase the equipment came from a loan we borrowed from Standard Chartered Bank of London.

In future, we should go by the opinion of Attorney General Githu Muigai, namely, that G-to-G deals must not preclude  international competitive bidding. G-to-G deals are a con. Period.