Business Daily (Nairobi)
Morris Aron
14 May 2008
Two universities are locked in a fight for a chance to buy a prime property in Nairobi's central business district to match the growing demand for degree programmes.
University of Nairobi and Kenyatta University are fighting for Posta Sacco Plaza - located at the Uhuru Highway/University Way corner - to house their Module II students and to strategically place classes at the source of a majority of part time evening students, mainly comprising the working class.
The development follows failure of an international investor, who is understood to have won the first bid of raising 10 per cent down payment to purchase the building after their bid was the highest compared to KU and UoN.
At the end of the first bidding late last month, the building was valued at Sh900 million. It is now understood that it could go as high as Sh1.5 billion depending on the interest of buyers.
Both universities are said to be considering the next course of action after the owners of the building - Post Sacco Limited and Posta Investment Limited - decided to re-advertise the tender bids for the building instead of choosing the second highest bid. According to sources close to the deal, University of Nairobi was the second highest bidder.
In the event that the first bidder fails to meet the terms and conditions set in the bidding rules, the second bidder was to be automatically chosen as the winner.
Instead, Post Sacco has decided to re-advertise the tender as per yesterdays dailies, contrary to procurement rules and regulations. Both parties have, however, decided to play low and bid in secrecy instead of the publicity that accompanies complaints addressed through the court.
"Both bidders know that the strategic location of this building is of immense future value for their core business," said a source who did not want to be named.
The building was put up for sale after a number of shareholders at Posta Sacco expressed dissatisfaction with the manner in which rental revenue was being set, collected and used by the investment arm of the Sacco.
Business Daily has since learnt that there are offices in the building that are renting the premises at Sh35 per square feet instead of Sh55 per square feet.
The building has 17 floors of offices, three levels of parking in the basement with a total of 74 parking spaces, and stores.
It has a total of 115,000 square feet of office and shop space, four lifts and a standby generator.
Property valuers approximate its worth at Sh1billion, with an option for a higher rating if bought for specialised use such as education.
Prior to the announcement of plans to sell the building, University of Nairobi is understood to have started renting office space in the neighbouring AM Bank house as administration offices and class space for parallel students.
Parallel education was introduced in 1998 after increased enrolment for university education, coupled with dismal economic performance, forced the government to rethink its policies on financing university education. Public universities, increasingly starved of funds from the government, turned to commercial avenues that could to supplement their incomes.
Over the last few years, the most popular approach has been to introduce Module II or parallel degree programmes for self-sponsored students.
The programme is where students with capability to pay their university fees without the government subsidising the cost of their tuition are allowed to enrol for the courses - provided they meet basic minimum qualifications.
University of Nairobi was the first public university to go down this route, but almost all seven public universities have started similar programmes.
UoN raked in Sh1.98 billion from the module II programme in the 2004/5 financial year.
Moi University has had a similar trend, with income from its parallel programme in 2003/4 raking in Sh283 million, more than double its value five years before (Sh106 million).
But as self sponsored students grow in tandem with evening part time classes and public calls for the need for universities not to peg admission on bed capacity, universities have been finding it hard to accommodate students in facilities within the institutions.
At the University of Nairobi for example, class space constraints is a chronic issue, resulting in the institution looking for additional space around in its satellite compounds.
Interest in Posta Sacco Plaza is a strategic response to the need to secure space, analysts say.
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