KPC MD summoned over pipeline tender row

Workers on a Kenya Pipeline Company extension project. Uganda has signed a crude oil pipeline agreement with Tanzania to explore the Tanga route. FILE PHOTO | NATION MEDIA GROUP

What you need to know:

  • The controversy surrounds the award of a tender for the planned construction of a Sh53 billion Mombasa-Nairobi oil pipeline.
  • The latest development emerged as the controversy also headed to the Ethics and Anti-Corruption Commission.
  • Some of the bidders involved in the tender have appealed against the award to Zakhem International Construction citing irregularities.
  • Once completed in 2016, the new line will replace the existing 14-inch diameter line which has been operational since 1978.

The controversy surrounding the award of a tender for planned construction of a Sh53 billion Mombasa-Nairobi oil pipeline took a new twist Sunday when a parliamentary committee said it had summoned the Kenya Pipeline Company managing director over the issue.

The chairman of the Parliamentary Committee on Energy, Mr Jamleck Kamau, said his committee had summoned the KPC managing director, Mr Charles Tanui, to respond to a number of questions that have been raised over the award of the tender to a Lebanese firm Zakhem International Construction.

“We have asked the KPC managing director to appear before our committee on Wednesday so that he can shed some light on the issues surrounding the tender,” Mr Kamau told the Nation in a telephone interview.

The latest development emerged as the controversy also headed to the Ethics and Anti-Corruption Commission.

The EACC chairman Mumo Matemu, said he was aware of the controversy surrounding the oil pipeline tender but promised to issue a comprehensive statement after being briefed by his officers.

“I need to be briefed on the latest developments before I can issue a comprehensive statement on the matter,” Mr Matemu said.

It also emerged Sunday that a senior manager at KPC involved in the tender process had been threatened with dire consequences by unknown people.

IRREGULARITIES

Some of the bidders involved in the tender have appealed against the award to Zakhem International Construction citing irregularities. The matter is pending before the Public Procurement Administrative Review Board.

They, among other reasons, claim that the bid bond deposited by the Lebanese firm was from Eco Bank Nigeria while regulations require bidders to provide bank guarantees issued by banks based in Kenya.

The bidders also allege that due diligence was not followed by KPC before awarding the tender adding that the valuation was done in a hurry and that it was not possible for bids worth such a large sum of money to be evaluated in less than 10 hours “unless there was a prior choice.”

They have also questioned the manner in which the technical evaluation was done.

At least four bidders want the board to reverse the decision by KPC to award the tender to Zakhem International Construction. Thirteen firms were interested in the tender.

Zakhem International, a family-owned firm, shrugged off stiff competition from prominent Chinese competitors.

The company submitted a Sh43 billion bid to replace a pipeline that has been in use since 1978.

OFFER BELOW ESTIMATES

Its offer was Sh10 billion below the estimates of KPC to build a 20-inch diameter pipeline from Mombasa to Nairobi.

The losers alleged that Zakhem’s bid was reduced by seven per cent under dubious circumstances by some tender committee members.

In May 2014, the project was thrown into controversy after some interested parties faulted the postponement of the opening of the bid at the last minute.

They said the postponement cost them millions of shillings in travel and accommodation expenses.

The companies, mainly from China and India, had responded to the January 2013 international tender.

Kenya Pipeline Corporation has fought off allegations of irregularities saying the tender was above board.

The Vision 2030 flagship project tender has been marred by allegations of irregularities after KPC reportedly removed midstream a clause that requires companies to prove that they can obtain 70 per cent financing before being short-listed.

The battle spilled over to the Constitution and Human Rights Division of the High Court where it was resolved.

Once completed in 2016, the new line will replace the existing 14-inch diameter line which has been operational since 1978.