KISERO: There’s more to railway contract row than Keter - Daily Nation

KISERO: There’s more to railway contract row than Keter

Sunday December 22 2013

Nandi Hills MP Alfred Keter. He claimed on Wednesday that President Kenyatta’s visit to the Rift Valley achieved nothing. PHOTO/FILE

Nandi Hills MP Alfred Keter. Not surprisingly, there is expectation of reward through government contracts, in what would be a reincarnation of payback for political loyalty of the one party era. PHOTO/FILE 

To the ordinary observer, the fact that the raging controversy about the Standard Gauge Railway project emerged as one of the talking points during the rallies attended by President Uhuru Kenyatta last week came as a big surprise.

Those rallies were principally called to address grievances by the Kalenjin elite about what they see as disparities in the sharing of spoils between the two ethnic groups that form the power base of the Jubilee government.

Ordinarily, a subject as technical as omissions in procurement of a large Chinese-funded infrastructural project would not be the stuff for discussion in political rallies in deep rural Kenya.

Yet one after another, the leaders took turns to attack an unnamed middleman and broker they accused of sponsoring the campaign against the Chinese-funded project.

They all spoke in riddles, all of them strenuously avoiding naming the individual they said is undermining the Kenyatta administration’s pet infrastructure project.

Granted, the issue had been raised by Nandi Hills MP Alfred Keter. The leaders were bound to respond to the remarks by a man keen to play the new gadfly of Nandi politics.

But one thing was clear. By taking the issue of the Standard Gauge Railway project to the centre stage of the rallies — and considering that the meetings were taking place in the context of a new wave of disgruntlement within sections of the Kalenjin elite over the sharing of power and positions in the Jubilee administration — the leaders had brought to the fore one of the most serious political struggles going on quietly in Kenya today: the intense factional fighting over the opportunity to patronise and broker multi-billion Chinese-funded infrastructure projects.

These days, being a broker or point man for a big Chinese contractor involved in the implementation of a huge infrastructure project in Kenya is a very lucrative affair.

Each of the major Chinese contractors doing a major project will align itself with a political pointman or broker — mainly well-connected businessmen with friends in high places.

This is not to say that companies from the West are averse to this type of lobbying tactics.

The only difference is that Chinese companies these days rule the roost in Kenya when it comes to large infrastructure projects. They are doing roads, ports, pipelines, geothermal wells and electricity transmission projects.

When the government of former President Mwai Kibaki ended, the Chinese construction companies that depended on the patronage of that regime found themselves exposed.

The fight to inherit the patronage of these orphans has been intense. So have been the battles to supplant Chinese contractors politically linked with the Kibaki-Raila regime. Examples abound.

For instance, at the National Social Security Fund (NSSF), a good number of the big property development contracts that were awarded to Chinese companies during the tenure of the Kibaki-Raila administration have since been cancelled and re-advertised.

Even where the Chinese companies won the contracts competitively, they are finding it hard to hold on what they had fairly won.

Another good example is the explosive fight between two Chinese construction companies over the multi-billion-shilling Mzima Springs II water pipeline project.

One of the companies — China Machinery Engineering Company (CMEC) — all along assumed that it was about to seal the deal. It had even gone to the extent of signing a commercial agreement with the ministry of Water Development in January 2013.

But following the change in government, the company discovered that the ministry had opened negotiations with another Chinese company for the same project.

Reality dawned in September it found that the new wielders of political power at the ministry of Water Development had written to Solicitor General Njee Muturi inviting him to comment on yet another commercial agreement with another Chinese company — China Water Construction Consortium.

Even the Solicitor General was taken aback by the emergence of the new player on the scene.

“This office had in January 19, 2013 reviewed a similar contract for the same project between the Ministry of Water Development and China Machinery Engineering Corporation,” he said in a letter dated September 20.

CMEC is said to have enjoyed the patronage and the support of sections of the elite of the Kibaki-Raila era.

In the new game in town, fortunes change depending on the clout your broker or point man can marshall at any given time.

What surprises in the lobbying against the Standard Gauge Railway project is that it has come too late in the day. Neither does the claim that the big project was single-sourced hold much water.

Indeed, several large infrastructure projects procured under the so-called government-to-government arrangements have been procured in the same manner as the railway project.

The examples that immediately come to mind include the Mama Lucy Kibaki Hospital, the Kenyatta University Library, the Nairobi Southern By-pass and the Eastern By-pass.

Granted, there are legitimate concerns about the manner in which projects funded by the Chinese are procured.

There is clearly no transparency in an arrangement where a contractor does a feasibility study for you on terms of reference it has drawn up, does the engineering designs on its own and then proceeds to organise a loan for you from his country.

However, the current political furore over the railway project is not about the lack of transparency in the way Chinese-funded infrastructure projects are procured.

COMPETITION

It is about the brazen competition for spoils between factions of the ruling elite.

Since this project originated in the Kibaki-Raila era, competition by brokers to inherit it was inevitably going to be fierce.

The lobbying against the railway project started in earnest in the build-up to President Kenyatta’s recent visit to China.

Out of the blue, a new company with a set of new brokers and pointmen — The China Railways Construction Company — had sprung up to fight for the lucrative project.

And the local backers of this company had very strong points. First, they circulated information seeking to prove that the contract price, which China Roads and Bridges Corporation had signed with the Kenya government, had been grossly inflated.

They also put out information purporting to prove that more complex railway projects in Ethiopia, Djibouti, Nigeria and Tanzania had been completed at much lower prices.

Thirdly, information purporting to prove that China Railway Construction was a much bigger company with deeper pockets, and therefore greater capacity to accomplish the project, was disseminated.

Is the contract price of the railway project inflated?

Indeed, the Ministry and Transport and Infrastructure also put out data and information comparing the cost with similar projects in Uganda and Ethiopia that show that the price is competitive.

Until an independent party audit on the project is conducted, a fair verdict on whether the cost of the project is inflated or not is not possible at this stage.