Favourable payment terms and the use of the latest technology will be Safaricom’s strongest points in defending a Sh15 billion contract it has entered with the government when the firm’s officials appear before a parliamentary committee on Thursday.
Senior officials of the mobile operator have been summoned to appear before the departmental committee on Administration of Justice and National Security to shed more light on the contract.
The firm had entered a deal with the government, through the Ministry of Interior, to develop a communications and surveillance system for the police to fortify the fight against terrorism.
“We want to find out the details of the contract and the proposed solution before it is signed,” said committee chairman Asman Kamama.
The committee halted the contract signing ceremony scheduled for June 9. The committee has grilled Interior Secretary Joseph ole Lenku, Principal Secretary Mutea Iringo and Inspector-General of Police David Kimaiyo over the contract.
The project was first announced by President Uhuru Kenyatta, an indication of how important it is to the Jubilee government.
The parliamentary inquiry seeks to determine whether due process was followed in awarding the contract to Safaricom and whether the pricing is right.
The government said the contract was awarded to Safaricom through a closed system allowed within the public procurement law.
Some committee members have questioned the capacity of Safaricom to deliver on a project of such magnitude while others have raised security concerns given that the company is majority owned by a foreign company – British-based Vodafone. There have also been questions of how separate the security network would be from Safaricom’s commercial network.
But the firm last week sought to set the record straight, saying the police network would run independently of the commercial network.
“Safaricom will provide network services on a secure 4G channel dedicated to the national police,” the firm said.
The committee has asked why Safaricom’s solution covering just Nairobi and Mombasa would cost almost the same as a project offered by Chinese firm ZTE to cover the whole country.
But Safaricom says its systems are superior in terms of technology. Its solution, it says, will run on a 4G (Long Term Evolution) network which is the latest mobile technology, compared to the next available option of the Global Open Trunking Architecture which is based on 3G.
Should the deal sail through, Safaricom would first set up a central command, communication and control centre for the police.
The next phase, to be completed in two years, includes the installation of 1,800 CCTV cameras in strategic locations in Nairobi and Mombasa. The cameras will have automatic face and number plate recognition capabilities.
It is in this phase that Safaricom is also required to build an independent 4G (LTE) network for the police service and supply 7,600 radio communication devices fitted with SIM cards and able to take photographs and videos.
Footage from the CCTV cameras and the handheld devices will be relayed in rea time to the central surveillance and command centre. Six hundred police vehicles will be connected to the central command centre.
The final phase will involve scaling up the system to cover other major cities. But this is not part of the current contract.
Upon the project’s completion, Safaricom is expected to have put up a radio communication system, CCTV surveillance system, command and control system, video conferencing facilities, automatic vehicle location services and connected 195 police stations to the internet.
It will also be required to provide a warranty and spare parts for five years during which it is to maintain and support the system.
Building the system will cost Sh12.7 billion while maintenance and support for five years is estimated at Sh2.2 billion, totalling Sh14.9 billion.
Safaricom says it will raise the whole amount and is to deliver the project at cost — without a profit margin — with the government paying after the project is handed over.
The government will refund the money on relatively easy terms. First, Sh7.5 billion will be paid through allocation of spectrum of an equal value to Safaricom after the digital migration. The rest will be paid in annual instalments over five years beginning 2016.
According to sources familiar with the ZTE contract which was cancelled following a long court fight with Huawei, the government was required to pay 90 per cent up front.