PUBLISHED ON December 4th, 2014

MPs stop standard gauge rail contract

Parliament has stopped the controversial Sh3.7 billion ($41 million) contract awarded to a Chinese firm for supervision of the standard gauge railway construction between Mombasa and Nairobi over irregularities.

The Public Investment Committee (PIC), which has been investigating alleged improprieties in the procurement of the project, wants the tender awarded to a consortium led by Chinese firm Third Railway Survey and Design Institute (TSDI) Group cancelled.

The committee’s verdict will complicate the construction of the mega rail that will cost taxpayers Sh447 billion.

PIC wants the managing director of Kenya Railways Atanas Maina and the firm’s tender committee investigated by the anti-graft agency for disregarding Parliament’s directive for an independent consultant to review and oversee the construction work.

The directive was one of the conditions attached to the approval of the construction of the railway, a deal that attracted widespread criticism that it was overpriced and not transparent.

The committee says the supervision contract was not transparent and picking a Beijing-based firm to monitor a fellow Chinese company amounts to conflict of interest.

“There is a clear, real and present threat that the construction of SGR will suffer from lack of a truly independent supervision, especially in terms of quality guarantee and adherence to quality specifications,” said the committee.

“This is the reason as to what the committee in its report of April 2014 that was adopted by this House recommended for the procurement of an independent consultant.”

PIC observed that TSDI and China Road and Bridge Corporation (CRBC), which was appointed to build the Sh447 billion line, were both owned by the Chinese government.

“The arrangement raises serious and fundamental constitutional and statutory questions,” PIC said in the report.

The committee said TSDI and CRBC are supervised by the same supervisory body, State-owned Assets Supervision and Administration Commission of the State Council, which also ensures that the two post profits for the People’s Republic of China.

Kenya Railways appointed the TSDI consortium on June 3. The other consortium members – Apec Consortium Ltd and Edon Consultancy International Ltd – are Kenyan companies.

The committee said TSDI is the only firm in the consortium having experience in major railway projects, yet it is tasked with the mandate of performing only 30 to 40 per cent of the consultancy contract.

“The remaining 60 per cent will be performed by Apec and Edon despite the fact that they have never supervised any railway project in Kenya or elsewhere in the world,” noted PIC.

The MPs said evidence points to a process that was marred by secrecy, favouritism, arbitrariness and contradictions. They accused Kenya Railways of lowering some mandatory and crucial requirements in the tender documents by way of addendum to suit the consortium.

“Officers culpable in the irregular procurement of an independent consultant for SGR be surcharged for losses that the government of Kenya and KRC may have incurred as a result of their action in the procurement process,” the committee said.

PIC also questioned the TSDI bid of $41.18 million, which was almost half of the $73.9 million submitted by Team Engineering SPA and the $87.3 million by Korean Railway Network Corp.

“TSDI/Apec/Edon deliberately quoted a low figure of $41.18 million in anticipation of benefiting from an amount of $9.4 million, which was hidden in the main contract between KRC and CRBC,” the committee said.

Source: Business Daily

Disclaimer: The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of TradeMark Africa.