Capital FM (Nairobi)

20 January 2014

Kenya: Kamau Taken to Task Over Railway Render

Nairobi — Transport Cabinet Secretary Engineer Michael Kamau was on Monday hard-pressed to explain why the government flouted procurement regulations in awarding the controversial railway tender to a Chinese firm.

Kamau was particularly required to clarify why the government has to pay a loan insurance of 6.93 percent in constructing the Standard Gauge Railway, yet it is a government-to-government tender.

Kamau however explained that the loan was to cover the commercial loan by the Exim bank of China, noting that it did not apply to the loan by the government of China.

"Where we use development partner money, in spite of us having a percentage that we contribute, we have always used procurement laws of the development partner who is providing the money," he explained.

He said though the country's procurement laws could have been overlooked in the entire contracting process, it was not a unique situation since it also applies to other projects being carried out by Kenya.

The committee also wanted to know whether the China Road and Bridge Corporation meets the required standards to undertake a project of this magnitude.

In a statement to the committee, he explained that other than the company having 30 years experience in civil construction in Kenya, a due diligence was undertaken by the government officers that "confirmed that the contractor had the technical, financial and human resource capacity to undertake the project."

"The Embassy of People's Republic of China in Kenya wrote confirming the technical capacity for the China Road and Bridge to undertake he project," it reads.

He went ahead to give an example of Berth number 19 at the Port of Mombasa, Southern Bypass, Northern Bypass and Mutito Andei-Bachuma gate road reconstruction undertaken by the company in the country.

Also questioned were Acting Managing Director Kenya Railways, Alfred Matheka and the Director of Public Procurement Oversight Authority Morris Juma.

Matheka explained to the committee how the country acquired the loan and the requirements laid out.

"The loan is in two components, and because the cost of this project was too huge to be met through the concession loan, the other aspect was to go to the commercial window of the Exim Bank to get the additional funding," he stated.

"In this commercial window, one of the requirements is that any entity whether it is a country has to insure that loan."

Despite the committee pushing him to agree that the agreement could not have been on a government to government basis, he declined his position.

At one time, a member of the committee Mithika Linturi decided to offer financial advice to Matheka.

"I am an insurer and I will share this information for free, in cases where commercial institutions ask for a premium for a certain loan bond by any borrower, in most cases it will happen whereby the people asking for that loan own a private company."

He went further to say, "there will be no insurance for a loan secured by government. Kenya will permanently live... this brings to a conclusion that this was not a government-to-government arrangement."

The committee will continue with its questioning on Tuesday with Cabinet Secretary for Treasury Henry Rotich among others.

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