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Lay bare mega public projects’ secret deals

Monday January 14 2019

EDITORIAL
By EDITORIAL
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Director of Public Prosecution Noordin Haji ought to order investigations into the Standard Gauge Railway project and other big infrastructure projects financed by the Kenyan taxpayer, especially through Chinese loans.
In the SGR, Kenya has entered into a secret agreement with China, a nation well known for imperial ambitions and unfair trade practices. The project, 973 kilometres from Mombasa to Malaba costing Sh1.06 trillion — give or take a few billions — is huge. Some sections cost Sh1.3 billion a kilometre, or Sh130 million a metre. Granted, the 120km Nairobi-Naivasha segment goes through challenging terrain, apparently requiring 17 kilometres of bridges and seven of tunnels.

VALUE FOR MONEY
For a single-track, diesel-powered, non-electrified railway line, this is a very expensive undertaking. And the loans required mean that the government is taking out a mortgage on the country. This deal, therefore, needs to be checked, re-checked and checked again to confirm that the contracting is pristine, there is no corruption, the taxpayer is getting value for money and all other alternatives have been explored and fairly discounted.
Reporting by the Sunday Nation yesterday revealed a couple of troubling facts from the contract signed by National Treasury Minister Henry Rotich and then-chairman of the Chinese Export-Import bank, a state entity, Mr Li Riogu, on May 11, 2014.
First, the government placed all the nation’s assets on the gaming table, pledging them as security for the project. The Mombasa-Nairobi section of the railway, which is already built, is run by the Chinese, who, going by recent reporting, have also been mismanaging it, resulting in allegations of pilferage.
Secondly, the government appears to have waived its right to neutral and fair arbitration in case of a dispute, as there is bound to be when big commercial projects of this nature are involved. Legally, the government has tied its hands and legs, accepting the China International Economic and Trade Arbitration Commission — another Chinese state entity — as the sole mediator.

EXPLOITATIVE DEALS
Thirdly, by meekly agreeing to the condition that the loan agreement is “governed by and construed in accordance with the laws of China”, Kenya submitted to the laws of another nation, which few competently understand. It also agreed to keep secret the terms of the loan agreement and not to brief even its own citizens without the permission — in writing — of a foreign power.
This may be a standard feature of this type of agreements, most of which are exploitative and neo-colonial, but if the contract is fair, why go to such lengths to keep it secret?
These revelations give rise to the obvious question: What else are they hiding? And not just in SGR, but also in the humongous infrastructure projects in roads, airports and the energy sector. The little that has been investigated in other utilities, such as Kenya Power and Kenya Pipeline, reveals deep rot.
Issue is in the detail
The case for an SGR between Mombasa and Malaba has been made. People can bicker about timing, cost and short-term viability but, in terms of the long term strategic goal of making the economy competitive, there can be no argument about that. The issue is in the detail of its contracting and implementation.

VANITY EXTRVAGANCES
For a government with such a keen appetite for money, an investigation is required to confirm that the cash is going into good use. This year’s Sh3.07 trillion budget is 30 per cent higher than the previous year’s. Of that, 31 per cent has gone into servicing loans, 12 percent to the counties and 54 per cent to the national government — a full Sh1.7 trillion. Of that, half goes to salaries and 20 per cent to infrastructure-type entities.
But even for those who support these big projects, there is still room for caution to ensure that investments have the desired effect on the lives of the people so that we don’t end up with vanity extravagances like Félix Houphouët-Boigny’s cathedral in his village of Yamoussoukro. Yes, it’s a big cathedral, but does anyone worship there?
Recently, the Kenya Navy turned out one of its “warships”, a Soviet-made, World War II-era river boat. The guns on it looked like horse-drawn canons from the Napoleonic wars. It, no doubt, was procured at some expense and in great secrecy.
Corrupt procurement and unexamined contracting not only waste public funds, but also defeat critical national objectives, such as security and economic competitiveness. After a year in office, Mr Haji should now have the confidence to seek answers to the big questions in the minds of Kenyans and order broad investigations, audits and prosecutions to protect Kenya’s future.

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