Kenha wants firms’ petition on Sh160bn tender struck out

The Kenya National Highways Authority wants a petition brought against it at the Public Private Partnerships Petitions Committee, by a consortium of four foreign firms which lost the tender to construct the 187 kilometre Nairobi-Mau Summit highway, to be struck out on a technicality, according to a document seen by the Sunday Nation.

In an affidavit sworn on March 14 by Eng. George Kiiru, the deputy director in Kenha’s public-private partnerships department, the roads authority claims that the person who filed the petition on behalf of the losing consortium is a “stranger” to the tendering process.

Mr John Kaigua Kimotho filed the petition on behalf of a consortium of Egis Projects S.A (France), Mota-Engil-Engenharia E Construcao Africa, S.A (Portugal), Africa Infrastructure Investment Managers Seed Partnership (South Africa), and Orascom Construction Ltd (Egypt) — which lost the bid to construct the road.

NULLITY

However, Kenha now claims that the consortium granted the power of attorney in their tender document to one Joao Vasco Alves dos Reis as “its true and lawful attorney” for matters relating to the tender.

“The purported petition … is incompetent and a nullity and ought to be struck out and dismissed for the reason that the applicant John Kaigua Kimotho who was has purportedly petitioned for and on behalf of the petitioning consortium and has sworn the affidavit in support of the purported petition is a stranger to the tender process for the reason that he is not authorised representative of the consortium,” the Kenha letter says.

The affidavit further states that the power of attorney granted to Mr Kimotho by the consortium and which is attached to the petition is invalid since it was not communicated to Kenha beforehand “as required by the tender documents.”

The consortium, which calls itself Mota-Engil, since the Portuguese firm is the lead member, is contesting Kenha’s decision of February 27 to award the tender to Rift Valley Connect consortium (RVC) which is composed of three French firms Vinci Highways, Meridian Infrastructure Africa Fund, and Vinci Concessions.

PRESTIGE

The Nairobi-Mau Summit highway project will be the most prestigious road project ever and will be the first one to be constructed under the Public-Private Partnership programme.

It is projected to cost more than Sh160 billion and will be the second most expensive infrastructure project to be undertaken by President Uhuru Kenyatta’s government after the Sh327 billion Standard Gauge Railway from Mombasa to Nairobi. RVC submitted the lowest bid at Sh159 million, while Mota-Engil quoted Sh195 million.

However, the commencement of the project might face significant delays as the two foreign consortia battle for the control of the project, a fight that might as well end up in courts.

At the heart of their fight is how much income tax the two companies ought to pay to the Kenyan government from the tender. Both consortia used the wrong models to compute their Income Tax obligations.

RVC’s computation led to it understating the tax projections by Sh31 billion over the 30-year concession period while Mota-Engil’s financial model led it to overstate its obligations by more than Sh1.6 billion.

TAX ERRORS

Last November Kenha director general Eng. Peter Mundinia wrote to Treasury Principal Secretary saying his team had noted the errors in the tax computation for both bidders but had decided to waiver them.

In their petition, Mota-Engil accuses Kenha of not being forthcoming with information and now wants the road authority to be compelled to release all the relevant reports related to the tender.

The consortium accused Kenha of “cloaking the entire evaluation process in secrecy and intrigue” to the extent that its fairness and impartiality are highly questionable and its outcomes irredeemably inconsistent with fair process to the Bidders.”

Mota-Engil sent Kenha a letter on March 5 requesting for the evaluation-related documents but went on to file the petition three days later, which the latter said was a short period to give feedback.

The consortium however said Kenha is yet to furnish it with the documents more than 10 days after it made the request, a sign that there was never any intention to release them.

However, Kenha through Eng. Kiiru’s affidavit, said it is legally bound from releasing the documents.

“The consortium is well aware that the Respondent (Kenha) is prohibited by clause 9.1.2 of the tender document from disclosing to the consortium or any other bidder the content, examination, clarification and evaluation of bids and recommendations concerning the award of the project which forms an integral part of the information sought through the Consortium’s letter dated March 5, 2019,” Kenha said.

The affidavit further states: “Disclosure of the information sought by the consortium would gravely prejudice the commercial interests of the other bidder which at a time when the negotiation process of the subject tender has not been undertaken.”

COURT ORDERS

On Monday, the petition committee will determine whether to issue orders compelling Kenha to release the tender documents.

However, Kenha has also challenged the legitimacy of the petition committee to hear the case.

As the two rivals battle it out, President Uhuru Kenyatta and his French counterpart Emmanuel Macron on Thursday witnessed Kenha sign a contract for an infrastructure project, but we could not establish if it is for the Nairobi-Mau Summit highway.

Intercontinental Consultants and Technocrats Limited (ICT), the firm which is the transaction adviser for consultancy services for the road project, has suggested that Kenha could re-tender the project as a way of solving the matter, but noted that this could hamper Kenya’s efforts to attract foreign interest in future PPP projects.