Irrigation board creates new Sh19bn dam scandal

Saturday May 11 2019

Itare dam

This photo taken on February 25, 2019 shows the site in Nakuru where Itare dam is to be constructed by CMC di ravenna. The project has stalled. The construction of another dam in Turkana is also entangled in controversy. PHOTO | FILE | NATION MEDIA GROUP 

VINCENT ACHUKA
By VINCENT ACHUKA
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Another multibillion-shilling dam scandal has emerged even as investigations into the Kimwarer and Arror dams in the Rift Valley continue.

A Chinese firm awarded a Sh19 billion tender to construct Lowaat Dam in Turkana County had been blacklisted by six multilateral development banks (MDBs) at the time the National Irrigation Board (NIB) invited bids for the project.

The unusual award of the tender, which was characterised by legal drama between 2016 and 2018, is set to further lift the lid on the dirty world of big projects, which often leave the taxpayer poorer.

The tender also turns the spotlight onto how Chinese companies are elbowing their way into lucrative contracts in Africa by hook and crook.

Just last month, the Nation uncovered a similar scandal at the Kenya Ports Authority (KPA), where another blacklisted company, China Communications Construction Company (CCCC), was awarded a Sh40 billion tender to construct the Kipevu Oil Terminal (KOT).

The matter is currently under investigation by the Ethics and Anti-Corruption Commission (EACC).

FRAUD

In this new scandal, NIB in July last year awarded China International Water and Electric Corporation (CWE) a tender to construct the dam.

The award was not without controversy as CWE had initially lost the tender to Sinotec Company Ltd, which had formed a joint venture with three others and quoted Sh29 billion.

CWE successfully appealed the award at the Public Procurement Administrative Review Board (PPRB).

In its ruling, PPRB found out that NIB had fraudulently increased CWE’s bid to be at par with Sinotec Limited.

The procuring entity, in what it termed a correction of errors, increased the applicant’s price to $290,699,827 from $179,943,027.

Consequently, the review board annulled the tender and directed NIB to conduct fresh evaluation on June 14.

Then something strange happened a week later. Instead of calling for a fresh tender as ordered by the review board, NIB notified CWE that it would now undertake construction of the dam at Sh18.5 billion.

CANCELLED CONTRACT

This is despite the company having said it would do the work at Sh17.9 billion. Why did NIB decide to add an extra Sh600 million to CWE’s bid?

This addition was made even after PPRB discovered that the irrigation board had added an extra Sh11 billion to CWE’s earlier bid before cancelling it and ordering for a fresh tender.

“There is absolutely nothing wrong with the tender,” NIB’s managing director Gitonga Mugambi insisted on Friday.

What is even more intriguing is that the World Bank, in September 2014, found CWE guilty of fraudulently winning dam construction contracts in South East Asia and Africa.

In Africa, Uganda cancelled a $1.6 billion (Sh161.6 trillion) contract the company had won in 2012 for the construction of the 660MW Karuma hydropower project.

It was discovered that the tender committee had been bribed with Sh120 million to overlook CWE’s suspect credentials.

The World Bank instituted investigations, which revealed that CWE had lied about the number of projects it had done in order to win the tender.

BLACKLISTED

Consequently, all the other eight MDB’s including the Africa Development Bank blacklisted the firm.

This happened in September 2014, and the blacklisting period was supposed to last until September 2017. But in February 2017, Japan International Cooperation Agency decided to extend the debarment period indefinitely.

The NIB had, on July 20, 2016, advertised the tender for the construction of the dam. Ten companies expressed interest.

Out of these, six were shortlisted and invited to provide technical and financial proposals. Only three managed to provide these requirements on time.

CMC Di Ravenna, which is currently under probe over the Kimwarer and Arror dams scandal, put in a Sh34 billion bid.

Sinotec said it would do the work at Sh29 billion, while CWE said it would dig the dam at Sh17.9 billion.

APPROVAL

A whistleblower wrote to PPRB on September 17 last year and raised the flag about CWE’s ineligibility based on its corrupt dealings in the past in a letter that is in the Saturday Nation’s possession, but his complaint fell on deaf ears.

Section 41 B of the Public Procurement and Disposal Act says, “the board shall debar a person from participating in procurement... on the ground that the person has committed an offence relating to procurement under any other Act or law of Kenya or any other jurisdiction.”

But NIB, in its response to the whistleblower’s letter, insisted that the fact that CWE had been blacklisted was not ground enough to cancel the contract.

“The bidder was required to sign a declaration that he has not and will not be involved in corrupt or fraudulent practices.

“The bidder did not submit to the board a declaration that he was debarred from participating in public procurement,” NIB said in a letter signed by Mr Mugambi.