Fights over big projects are all about politics and patronage of resources - Daily Nation

Fights over big projects are all about politics and patronage of resources

Tuesday August 21 2012

Jaindi Kisero

Managing Editor, Investigations

Jaindi Kisero Managing Editor, Investigations & Economic Affairs 

By JAINDI KISERO

On the surface, the decision by Transport minister Amos Kimunya to cancel the procurement of the Sh60 billion airport expansion project would appear to have been caused by differences over technicalities. It looks as if what is in question is whether procurement rules were followed.

The stakes were high for the minister. He decided to stick his neck out, completely disregarding the opinion of the Office of the Attorney General, who had advised against cancellation of the procurement process.

The fact that the process was at an advanced stage and that the Kenya Airports Authority (KAA) was in the middle of negotiations with the financiers of the project did not matter to him.

Mr Kimunya did not want to listen to the head of the public service, Mr Francis Kimemia, who advised that a decision on cancellation be postponed until after deliberations by the Cabinet committee on infrastructure.

Clearly, strong political undercurrents were at play here. This controversy is all about politics and competition for patronage of resources by different political camps. The parties have not disagreed about what is good for the country. It is a fratricidal power struggle between different very well-connected siblings.

We must remember that large projects with massive procurement needs open huge opportunities for kickbacks and backhanders.

Stakes get higher especially as elections approach. This is the time when ministers and their well-connected allies will scramble to have large projects being signed off quickly.

Is it just a coincidence that, all of a sudden, the number of controversies surrounding large procurement deals are increasing?

Why are the number of appeals lodged with the Public Procurement Oversight Authority increasing at such a fast rate? The other day, it was the tender for the biometric voter registration system that was cancelled.

Political undercurrents and infighting between departments in the Ministry of Immigration and Registration of Persons have made sure that the procurement of the second generation ID card has not seen the light of day.

In the Ministry of Energy, the Ministry of Finance has come out strongly to oppose a major public-private partnership deal where international oil trader Vitol wanted to construct 13 massive oil storage tanks in Nairobi to lease to the government.

I could go on and on with a list of projects that are being rushed so that they can be committed before the elections.

In future, we should insist that all projects funded by levies paid by the public be subjected to some form of public debate.

The standards of public disclosure should also be made higher. I say this because the project Mr Kimunya and his sparring partners are now fighting over will, at the end of the day, be paid for by a levy on airport users. The project is basically going to be financed through an airport tax charged to travellers.

Early this year, the minister for Finance, Mr Njeru Githae, increased airport tax by 100 per cent to make it possible for KAA to collect revenue to finance this project. What this means is that anybody who buys an air ticket out of Nairobi pays Sh3,400 for the airport expansion project.

Because users are going to pay for it, we should have subjected the terms of the loan to public discussion to allow comparisons with other sources of financing.

I have seen a copy of the agreement which the China Development Bank has offered KAA and keep wondering whether it is competitive.

Included in the terms are all manner of fees: front-end fees, advance payments, arrangement fees, and so on. Are these terms competitive?
Still, the most pertinent issue in all this is: does Kenya really need the proposed project?

In my view, the answer is a big Yes. At the rate at which Kenya Airways is expanding, the Jomo Kenyatta International Airport (JKIA) will soon start suffocating.

We must not forget that JKIA currently experiences congestion and that the national airline has been actively looking to Kilimanjaro Airport in Tanzania for some of its operations.

We need this project. However, the problem right now is that the agenda has been hijacked by groups fighting for spoils and unable to see beyond their own selfish interests.