Kimunya at the centre of a row over a Sh55bn airport tender
PHOTO | FILE Planes parked at the Jomo Kenyatta International Airport, Nairobi.
By MUGUMO MUNENE mmunene@ke.nationmedia.com
Posted Saturday, August 11 2012 at 23:30
Posted Saturday, August 11 2012 at 23:30
IN SUMMARY
- New airport plan in jeopardy as minister defies Attorney-General and Cabinet committee to cancel tender award to Chinese company that won bid to build new terminal at Jomo Kenyatta Airport
- Minister instructed KAA board to reverse decision to award the Sh55 billion airport construction project to Chinese company and start the process afresh. The Chinese firm has appealed against cancellation of the tender
Transport minister Amos Kimunya is at the centre of a new controversy involving the construction of a new airport terminal in Nairobi at an estimated cost of Sh55 billion.
The proposed facility, to be built on land next to Jomo Kenyatta International Airport, is one of Vision 2030 flagship projects — second in size only to Lamu Port. It is designed to decongest JKIA and affirm Nairobi’s position as the leading aviation hub in the eastern Africa region.
The proposed airport, known in government circles as the Greenfield Project, will have a state-of-the-art terminal and a new runway. It is not part of the ongoing expansion of JKIA.
Intrigues about the project have sucked in top officials in the Office of the President, the Prime Minister’s office and the Cabinet.
The Kenya Airports Authority (KAA), which falls in Mr Kimunya’s docket, is the implementing agency and its board and management have been mandated to identify a competent contractor to deliver the project.
It is Mr Kimunya’s role in the cancellation of a tender award to Chinese company Anhui Construction Engineering Group that has thrust the minister into the centre of the current controversy.
According to confidential documents seen by the Sunday Nation, Mr Kimunya had in January, through Permanent Secretary Dr Cyrus Njiru, instructed the KAA board to cancel the tender in controversial circumstances and restart the process afresh.
The Chinese firm has gone to the Public Procurement Oversight Authority seeking a review of the termination. The company argues that the purported cancellation is in breach of the law and the Transport minister and PS and KAA should be restrained.
On Friday, the KAA board was holding a crisis meeting most of the day as the push and pull in government circles over the project continues.
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But even as Mr Kimunya pushed for cancellation, KAA received communication from the acting Head of Public Service, Mr Francis Kimemia, directing the corporation to provide the Office of the President with a ground-breaking schedule for the project, expected to be done by the end of November.
Major infrastructure projects have been high on President Kibaki’s agenda and his handlers appear keen that the Head of State signs off the project before his exit from office. Speaking during the Kenya Airways Rights Issue ceremony on March 20, 2012, President Kibaki said: “I would like to see the expansion project move faster. Any delays are costly to the country. I, therefore, challenge Kenya Airports Authority to hasten the expansion of our airports.”
Projects of Greenfield’s magnitude routinely attract big political and financial lobbying locally and internationally. The Sunday Nation has been told that people with influence in government are supporting different companies interested in the project, sparking a vicious battle for the ultimate prize.
Currently, JKIA faces stiff competition from Ethiopia, Rwanda and South Africa in modernising air transport.
Addis Ababa is in the process of constructing a second major airport outside the capital while Kigali plans to build a $700 million (Sh56 billion) airport in the hope of establishing an alternative aviation hub in the region.
In an interview on Friday, Mr Kimunya said the procurement process was flawed and vowed to ensure the award to the Chinese firm is reversed.
“The process has to be restarted. It doesn’t matter to me who will break ground as long as we get it right,” Mr Kimunya said.
He added unequivocally: “Kama ni mbaya ni mbaya. Let’s move on to what will deliver.”
At first, Mr Kimunya was reluctant to comment on the project because it was under consideration in the Cabinet but he changed his mind and responded to a series of questions in a telephone interview lasting 31 minutes.
According to him, Kenya Airways is expected to make great use of the new facility and “they were not involved in the design. You cannot build without consulting them”.
However, according to documents in our possession, Kenya Airways was involved in the design of the master plan. In March 2010, KAA board papers show the design was changed to accommodate input by KQ and the Ministry of Transport.
Funds to start off the project preliminaries were included in the KAA budget for the current financial year.
Kenya Airways Managing Director Titus Naikuni could not be reached for comment as he is out of the country on official duty.
Mr Kimunya was at pains to justify his reasons for the cancellation given that the reasons he gave the Sunday Nation differed from what he had told the KAA board in January. At the time, he had, in the letter written by his PS, questioned the procurement process and not Kenya Airways’ involvement.
In any event, Mr Naikuni has long pushed for expansion and modernisation of the airport. Kenya Airways’ expansion plan, in which the airline will increase aircraft from the current 34 to 107, requires urgent construction of new facilities.
In a letter to the KAA Managing Director Stephen Gichuki on January 10 this year directing that the tendering process be restarted, the PS, Dr Njiru, said he had been instructed to order a retendering by Mr Kimunya because there was an “unacceptable number” of technical and financial proposals to be considered, the bidders did not provide finance, and that bidders should not have competed on the financial aspect of the project.
KAA wrote back, explaining that contrary to Dr Njiru’s letter, bidders were not supposed to finance the project but to identify a capable financier who KAA would directly negotiate with.
Mr Gichuki said that procedure had been followed “to the letter” and responded to every point raised by the PS.
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But a month later on February 10, Dr Njiru responded with new instructions to cancel the tender.
Three days later, Mr Kimunya and Dr Njiru summoned the KAA board and management and asked the board to cancel the tender and restart the process.
After the meeting, KAA wrote to Attorney-General Githu Muigai and external lawyers, seeking legal opinion on termination. Prof Muigai advised against cancellation and said due process had been followed. Cancelling the contract would “undermine the integrity and fairness of the procurement process”.
“We are of the considered opinion that termination of the procurement proceedings after award is tantamount to termination of the contract in the sense that a binding legal relationship already exists between the parties.
“Such termination will prompt the successful bidder to enforce rights under the contract in the form of claim for damages and specific performance,” the AG warned.
On Friday, Mr Kimunya told the Sunday Nation that he had not seen the AG’s advice. “In any event, he’s only a government lawyer”.
The move to cancel the award did not escape attention of the President’s office, where it attracted a dressing down.
“It is in bad taste and disrespectful to the Cabinet to attempt to compel the managing director to undertake such action behind the Cabinet Committee and the Cabinet itself. The board should give time to the Minister for Transport to appraise the Cabinet Committee and thereafter the Cabinet in its next meeting,” Mr Kimemia wrote.
According to Mr Kimemia, the same advice had been given to Dr Njiru during at meeting at the OP.
The Greenfield project, which will see the airport handle an extra 12 million travellers annually, was approved by the KAA board on March 9, 2011 after it presented a master plan to the Transport ministry.
The now controversial tender was advertised on June 24, 2011 and attracted three Kenyan companies, 12 Chinese firms, four European and three from other countries in Africa.
The number was limited by the stringent requirements; that they had to have constructed at least one similar airport in the previous 10 years, designed one in the previous five years, constructed a similar size facility in the previous five years and have a minimum business turnover of $200 million in the previous five years. They were also required to present a bid bond of Sh300 million, a form of assurance from a bank that they were capable of executing the contract.
KAA estimated that putting together the engineering and architectural drawings would cost no less than Sh30 million.
Documents seen by the Sunday Nation show that by October 3, 2011, the ministry of Transport had no issues with the procurement process.
On November 18 last year, a day after contractors submitted their bids, the Office of the Prime Minister wrote to KAA requesting a brief on the status of the project and to seek Cabinet approval.
The KAA board followed up a response with a visit to Prime Minister Raila Odinga’s office and was granted permission to proceed. A Cabinet paper was prepared and forwarded to the ministry of Transport.
After the tenders were received, five companies made it to the shortlist from which Anhui Construction Group, a Chinese company who partnered with UK firm Pascall + Watson Architects, were declared winners. The award was done on December 16, 2011.
No bidder appealed the decision.
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On January 11, 2012, China Development Bank forwarded formal terms to KAA on financing the project. It was about the same time that the Transport ministry started an earnest effort to have the tender cancelled.
In the meantime, the Ethics and Anti-Corruption Commission had received a complaint that the tendering process was flawed. They sent their officers on January 20 to collect the documents on the tender. A month later, they wrote back and said the project was in the clear and could proceed.
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