How the merry-go-round of litigation halts vital infrastructure procurement

A Kenya Pipeline Company depot in Nairobi. The Nairobi-Mombasa pipeline is a strategic investment for the country, writes Jaindi Kisero. PHOTO | WILLIAM OERI | FILE  NATION MEDIA GROUP

In Summary

• We may deride Ethiopia as a pseudo-democracy, but is it not the height of irony that we are now going to import power from the country?
• The existing line, which was commissioned way back in 1978, was found to have suffered extensive corrosion during an in-line inspection conducted in 2010

By Jaindi Kisero
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Two years ago, while with a group of fellow Kenyans on a tour of the massive dams the Ethiopians have built in the Gibe area, we found ourselves debating how our northern neighbour had managed to roll out huge infrastructure projects at a faster pace than ours.

 

We all concluded that it had something to do with our procurement system and the fact that, in this country, a disappointed contractor can hold a project hostage for months on end through procurement appeals and the court system.

Indeed, our procurement appeals system operates more or less like a casino: if as a contractor, you are dissatisfied with the outcome of a tender, you double your stakes and go to the Public Procurement Appeals Board.

If you are dissatisfied with the appeals board’s decision, you treble your stakes and go to the High Court. And if you are still dissatisfied, you go to the Court of Appeal.

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The expanded democratic space we have has also caused the mushrooming of single-issue lobby groups and civil society organisations that have mastered the art of public interest litigation, always on call to move to court to block and delay procurement and implementation of projects.

The parliamentary committee system has also become a major player. It is not uncommon to find one procurement project being subjected to parallel investigations by multiple parliamentary committees, the Procurement Appeals Board, and the High Court, all at once.

Is this a good trend? Opinion is divided. A friend argues that Kenya has found itself caught up in what he describes as the transparency cult. Another argues that as a society, we must accept to pay the high price for the democracy we are enjoying.

Projects are expensive in Kenya because contractors build in ‘procurement risks” associated with delays and uncertainty around procurement of large projects.

We may deride Ethiopia as a pseudo-democracy, but is it not the height of irony that we are now going to import power from the country?

Last year, we signed a contract under which Ethiopia will export to us what is going to be by far the cheapest power to go into our national grid. The electricity will be hitting our grid at US 7 cents a unit, nearly half what we buy from KenGen.

Transparency is a very good thing, But we need to find out a way of insulating the integrity institutions we have around procurement of infrastructure projects from capture by disappointed contractors.

CASES DISMISSED

Right now, we are in the middle of rolling out one of the largest infrastructure projects in the country, namely,the Nairobi- Mombasa multi-product pipeline.

The tender for the construction of the pipeline was awarded by the Kenya Pipeline Company to Zakhem Construction  International Ltd at a cost of $484.5 million.

As expected, the two disappointed contractors lodged a complaint with the appeals board, alleging irregularities in evaluation and award of the tender.

The two cases were dismissed last week. The parliamentary Committee for Energy and Communications has waded in, ordering the board and management of Kenya Pipeline to appear before them to answer allegations about irregularities in the award of the tender.

Is it right for the parliamentary committee to interfere in the matter, especially after the ruling of the Public Procurement Appeals Board?

What I know for sure is that this country needs a new pipeline between Mombasa and Nairobi like yesterday.

The existing line, which was commissioned way back in 1978, was found to have suffered extensive corrosion during an in-line inspection conducted in 2010.

According to the report, by the company, NDT Middle East, repairing the pipeline would be more expensive than building a new one.

We need new investments in petroleum infrastructure even as we prepare for the major developments happening in the oil and gas sector.

Uganda has plans to construct an inland refinery. We have discovered oil and the government has just announced plans to build a crude oil pipeline from Lokichar to Lamu.

The Nairobi-Mombasa pipeline is a strategic investment for the country.

jkisero@ke.nationmedia.com