Government officials are this week expected to shed light on how the standard gauge railway project went ahead even after revelations that Kenya Railways cancelled the tender with China Road and Bridge Corporation in March last year.
Documents seen by the Sunday Nation show that Transport Principal Secretary Nduva Muli wrote to China Road and Bridge Corporation last year informing them that the tender award for the Sh327 billion modern railway was cancelled because the right legal procedures had not been followed.
“Our report submitted to you dated October 2, 2012 showing this as a direct procurement was in error, and we wish to withdraw the same,” Mr Muli wrote to PPOA.
The PS and Transport and Infrastructure Secretary Michael Kamau have been on a charm offensive in the media defending the controversial project in the face of criticism that the proper procedure was not followed in arriving at the contractor and that it was wide open to legal challenges.
Mr Muli confirmed to the Sunday Nation on Saturday that the tender was cancelled due to ensuing legal issues and said the government had opted for an alternative single-sourcing procurement route for the project.
The reasons allowed in law for direct procurement emergencies are where there is no other reasonable alternative and where the supplier is the only one who can undertake the project.
He said Attorney-General Githu Muigai expressly authorised the government to enter into a contract with China Road and Bridge for the construction of modern railway between Mombasa and Nairobi, Kenya’s largest infrastructure project since independence.
Direct procurement also requires authorisation from the Public Procurement Oversight Authority, but inquiries by Sunday Nation indicate that this has not been issued.
He said the contracts that had been entered into would only come into force once financing is available. Kenya is financing 15 per cent of the cost while the Chinese Government and Exim Bank China will loan the other 85 per cent.
The PS said that in his reading of the law, the railway project was exempt from the rigorous tender processes demanded of other projects because it was based on a negotiated loan from the Chinese government.
He was referring to Section 6(1) of the Public Procurement and Disposal Act. But Mr Muli fell short of referring to the rest of the law.
Section 6(3) of the same Act provides that procurement processes must be followed in any instance where the government is putting in any money into a project as Prof Muigai interprets it.
In the case of the Mombasa-Nairobi standard gauge railway, the Kenya taxpayers would be paying for 15 per cent of the project.
In March last year, Prof Muigai questioned why the corporation was avoiding transparency in awarding the contract as he asked for further documentation from Kenya Railways.
“I must record that it is worrying that a procuring entity can pick and choose alternate procurement methodologies... neither alternative admits of open competition,” the AG said in a strongly worded opinion.
Equally, the AG added, even if the project were a government-to-government arrangement, Kenya Railway was not exempt from conducting competitive bidding in selecting the winner.
“Government-to-government agreements also demand compliance with procedures outlined under the Public Procurement Act,” the AG said. “Government-to-government agreements are not a method of selecting suppliers or supporting awarding of a contract.”
Prof Muigai was not immediately available for further comment, but sources at the State Law Office said he was preparing to make a presentation to MPs on his position when called upon.
“Contractual documents have been cleared for execution after the AG insisted that certain issues are cleared up,” the source told Sunday Nation. “You will be hearing more from the AG when he goes to Parliament.”
Mr Muli said the government was proceeding on the express authorisation of the AG and said he would share the authorisation issued with MPs. He did not say when the AG issued the alternative opinion and neither would he share it with the Sunday Nation.
On Saturday, the PS said; “The mistake everyone is making is that they do not understand that China Road and Bridge is owned by the Chinese government.”
He added that in that instance, there was no need for following procurement procedures.
However, Sunday Nation has seen samples of where tenders for other projects were advertised but restricted to the kind of suppliers that the country giving the loan or grant would prefer.
For example, the invitation for the supply of a communications system for the police made about two years ago was advertised in the press but restricted to Chinese companies “as part of the agreement of the concessionary loan.”
It was the same method adopted for the Kenya Rural Telecommunications Development Project (Phase II) which also was funded by the Chinese government.
The Mombasa-Nairobi railway project has been shrouded in controversy since last year. President Uhuru Kenyatta launched it anyway and told off critics.
Deputy President William Ruto has also admonished critics of the project, but the scepticism from political quarters and the questions about procedure have been incessant.
Sources in Parliament have told the Sunday Nation that MPs have lined up questions on how the project was converted from an electric to a diesel system and how this would be utilised in the future.