Lebanese firm wins Sh43bn tender to build new pipeline

Zakhem International Construction Limited, a Lebanese family-owned group, has shrugged off stiff competition from dominant Chinese firms to win a tender to build a modern oil pipeline between Nairobi and Mombasa from next month.

The firm submitted a Sh43 billion bid to replace the line, which was Sh10 billion less than estimates by the Kenya Pipeline Company for a 20-inch diameter multi-products line over the 452km stretch.
The firm scored the highest combined technical and financial score of 95.5 per cent and was thus ranked top.

The project will be the company’s first major undertaking in the country. It also won on the strength that it was involved in the testing and commissioning of the existing line. It was founded in 1963 with focus on Middle East and Africa.

On its website the firm lists it works as being water supply systems, sewage and waste water schemes, water pipelines, roads, highways, buildings, housing estates, hospitals, marine works, hotels and leisure facilities.

“Zakhem was involved in the construction of the current pipeline which was given a lifespan of 25 years, yet it has served for over 36 years,” added the statement.

The second, third and fourth lowest bids were by Chinese firms China Petroleum Engineering and Construction Corporation with a score of 89 per cent, Sinopec International Petroleum Service (84pc) and China Wu Yi Company Limited (83pc). The tender attracted 13 firms, seven of which were pre-qualified.

The three Chinese firms are predominant in Kenya’s major projects including Thika Super Highway, Kenya Pipeline Company’s Line IV expansion pipeline between Nairobi and Eldoret as well as KenGen’s steam pipelines and control systems for the Olkaria geothermal power plant.

Other bidders were Denis NV, PunjLoyd (Indian) and Saipem Business Unit Engineering Construction.

“The seven bidders met the minimum score of 50 per cent in each of the qualifying criteria and attained a minimum total score of 75 per cent and thus proceeded to financial evaluation.” The financial bids were opened on June 3.

Bidders were required to have undertaken similar work in the past 10 years, must be solvent, and able to enter legal pacts and produce audited accounts for the past five years.

An international tender for the Vision 2030 flagship project tender was floated in mid January last year before KPC fought off allegations of irregularities and court battles that it reportedly removed midstream, a clause that requires companies to prove that they can obtain 70 per cent financing before being shortlisted.