Kenya: Cereals Board and MPs Clash on Fertiliser Deal

28 November 2020

The National Cereals and Produce Board (NCPB) and a parliamentary committee are reading from different scripts over a fertiliser supply deal done in 2012.

Whereas the board says the 30,000-tonne transaction was above board and cost Sh1.8 billion, allegations before the Agriculture committee say the company was paid Sh4.2 billion to supply the same quantity.

Board managing director Joseph Kimote in his submission to the Agriculture and Livestock Committee of the National Assembly, which is investigating the matter, notes that the deal with Export Trading Company was good value for money.

"The value for money was ensured through a competitive process, which interrogated the wider market and subjected to further negotiations hence no public funds were lost," says Mr Kimote in his response to the committee.

"The supply price was within the market price rates, therefore, NCPB got value for money," the NCPB boss adds as he defended the choice of the company.

DAP fertiliser

MPs are investigating the quantity of fertiliser the board advertised for, amount paid and delivery and how Export Trading Company limited was awarded the bid.

Documents filed in Parliament and seen by the Nation show that on November 23, 2011, NCPB advertised the tender for the supply and delivery of 30,000 tonnes of bulk DAP fertiliser.

As at the time for tender opening, 11 companies had returned their bids.

They are MEA Limited, Pabari Distributors, Yara Switzerland, Export Trading Company Limited, Holbund limited, Euroworld Commodities, Afri Ventures FZE, Helicon Corporations Inc, Stradilor limited, Saudi Industrial Export and Farmers World Limpompo.

After preliminary evaluation, only four firms, Afri Ventures FZE, Pabari Distributors, Export Trading Company Limited and MEA limited, qualified to proceed to the technical evaluation stage.

At the technical evaluation, Afri Ventures FZE was the only company that qualified after attaining a score of 77 to proceed to the financial evaluation.

Tender committee

However, NCPB's evaluation committee determined that the tender in dispute was non-responsive because only one bidder had qualified and recommended that it be terminated subject to concurrence of the tender committee.

The board's tender committee upheld the resolutions of the evaluation committee and consequently terminated the tender.

After the termination, the tender committee decided to undertake direct procurement.

The team in its meeting of January 19, 2012 resolved that all those who participated in the initial tender plus a few known international fertiliser manufacturers or dealers be invited for talks.

But MEA Limited objected to the direct procurement method through an appeal it filed with the Public Procurement and Regulatory Authority (PPRA).

About 15 companies, the 11 which participated in the open tender, including MEA Limited except Saudi Industrial Export and Farmers World Limpompo, and four new ones, participated in the direct negotiations.

The four new entrants were Transammonia, Azomures, Ferteberia, Gavillon Fertilizer, Agri Commodities and Swiss Singapore.

PPRA documents show that the core area of negotiations that NCPB was interested in as the planting season drew near included the price, quantity, delivery schedule, quality parameters and contract and payment terms.

The documents further show that after comparing the attractiveness of the confirmed offers, the NCPB negotiation panel resolved that Export Trading Company Limited had the most attractive offer.

"Having considered the results of the negotiations and in particular the delivery period, price, terms of payment and other pertinent factors, the negotiation panel recommended to the tender committee that the 30,000 metric tonnes of DAP fertiliser be procured from Export Trading Company limited," NCPB documents filed with the committee shows.

The procurement was to be done at a negotiated price of $625 per metric tonne translating to $18.75 million (Sh1.8 billion).

Direct negotiations

However, MEA Limited lodged a request at the PPRA for review against the decision of NCPB for the purpose of annulling the award and doing a retender.

MEA Limited, which argued before PPRA that direct negotiations with identified suppliers was not one of the methods of procurement set out in the Public Procurement and Asset Disposal Act. It had quoted $640 per metric tonne and the delivery was to be in 35 days, way beyond the timeline NCPB was working with.

"By inviting direct negotiations with identified suppliers, the procuring entity invented its own method of procurement," MEA Limited, which interestingly had participated in the direct negotiations, argued.

But NCPB reasoned that due to the urgency of the procurement arising out of the need to have fertiliser available for supply to the farmers there was insufficient time to retender in time for the planting season that was just about to start.

NCPB says that the option for direct procurement, which is allowed under Section 74 of the Act, was the most appropriate with PPRA allowing the procurement process to continue.

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