Fresh queries over Chinese coal firm awarded Sh8bn job

Controversy surrounding the award of a multi-billion shillings coal mining tender to a suspect Chinese company is set to intensify with new details pointing to possible collusion with a Kenyan firm operating from behind the scenes.

Some politicians are also shown as having clashing interests in the coal project, filing contradicting reports in support and opposition to the Chinese company’s suitability for the lucrative tender.

Fenxi Industry Mining Group was picked last November by the Ministry of Energy to develop block C and D of Mui Coal Basin in Kitui County in an investment valued at more than Sh8.5 billion, but the deal has now run into controversy over corruption claims.

Water minister Charity Ngilu and Mutito MP Kiema Kilonzo have vowed to lobby to shoot down the tender in the Cabinet and in Parliament, claiming the Chinese company was a “proxy”, and that it was awarded the tender irregularly at the behest of powerful individuals angling for a share.

Law Society of Kenya chairman Eric Mutua is also lining up a suit this week to block the signing of an investment agreement between the government and Fenxi before full disclosure on the company.

Inquiries by the Nation have established inconsistencies that raise several intrigues on Fenxi Industry Mining Group and the process leading to the award of tender.

Our investigations reveal how competing political and economic interests for the coal project found their way into the ministry, and now threaten to derail exploitation of the coal reserves in the area estimated at over 500 million metric tonnes.

Several documents and official correspondence in our possession show that Fenxi Industry Mining Group could have been working with a Kenyan company that did not feature anywhere during the tender award process.

Documents also show the ministry went ahead and awarded the tender to Fenxi despite conflicting reports by two teams — among them, its own officials — which toured China early this year to assess whether the company was suitable for the job.

Assistant minister for Defence David Musila led the first 15 member delegation to China in March and filed a report, giving Fenxi a clean bill of health to proceed. The LSK boss was apparently a member of this delegation whose cost for their one week trip was fully paid for by the Chinese company.

In May, the government paid for 14 people led by Mr Kilonzo for a similar trip to China and upon their return, the team that included the ministry’s procurement officer Ms Mukami Kaburu, wrote a report pointing out that Fenxi Industry Mining Group was a “briefcase” company that did not exist in China.

Mr Kilonzo’s report indicated that while in China, Fenxi introduced a firm called Jingu Group as a partner but according to them, the company was a real estate development one without any experience in coal mining.

Further, Mr Kilonzo said they were told by the Jingu Group Board chairman, Mr Li Yu Xin that a Kenyan company identified in their report as Great Lakes would co-own 30 per cent shares in the coal project.

Their opposition, they said, was based in the fact that while Fenxi appears non-existent, Jingu and Great lakes were being introduced outside the normal tender process.

The Musila report did not mention Great Lakes and described Jingu Group only as Fenxi’s holding company.

Interviewed by the Nation, Musila and Kilonzo maintained their positions, with the former saying their brief in China was to tour coal mining activities and “not carry out due diligence on Fenxi.”

Mr Kilonzo said the Chinese firm “hoodwinked” the delegations by taking them on a tour of mining sites owned by different Chinese corporations.

In Nairobi, an independent investigation by the Nation established Fenxi Industry Mining Group was not listed in the Chinese mining companies’ directory. It has no official website, while questions put to the Chinese Embassy for verification were directed to the Ministry of Energy.

A visit to the location given as Fenxi’s offices led to apartment number 13 at Yaya Tower Apartments where a lady who identified herself as a personal assistant to the general manager lives. No one is allowed in.

A search for the company’s two given postal addresses in Nairobi showed that one of them belonged to a local bank (name withheld) and the other a local hotel (name withheld).

When reached for comment and asked about the claims on Fenxi, Energy minister Kiraitu Murungi asked the Nation to contact the PS for any answers on the project.

However, efforts to get Mr Wanyoike were futile the entire week. Messages sent to his three different mobile phones had not been answered as at Tuesday.