MP Alfred Keter has raised pertinent issues concerning the standard gauge railway project. As usual, Jubilee sycophants are demonizing him by claiming he is being sponsored to ‘make noise’ by someone who did not secure the construction deal. Why build a single-track railway at an exorbitant cost, yet the examples of other African countries indicate lower costs for double tracks? This is a potential mega-scandal for Uhuru’s government just like Moi had Goldenberg and Kibaki, the Anglo-Leasing scandal. The Ethics and Anti-Corruption Commission should launch an investigation into the matter.
Meanwhile, Deputy President William Ruto is trying hard to calm the Kalenjins who feel short-changed by President Uhuru Kenyatta’s top State job appointments favoring the Kikuyu community. All is not well in Jubilee because Ruto’s KES 4 billion budget for running his operations was withdrawn and transferred to State House. He now begs for money to buy toilet paper. Since when did a vice president have Executive powers in Kenya? Further, his close ally Senator Charles Keter alleged publicly towards the end of 2013, that some of the officers appointed by Uhuru were responsible for ‘fixing’ Ruto at the ICC. The Senator has since changed tune and supports the appointments.
The happy days of Uhuruto wearing matching shirts and ties are over. Ruto can only use proxies like Alfred Keter to fight the Mount Kenya Mafia. If he personally criticizes Uhuru, his goose will be cooked. Ruto should expect further political betrayal once he resumes trial at The Hague.
Has Ruto let the cat out of the bag with his lament about bad advice?
Following Deputy President William Ruto’s assertion last week that President Kenyatta was being misled by advisors, one would expect a whole slew of senior functionaries at State House, the Office of the President, the State Law Office, cabinet offices, and other places where advice is sought, to be taking cover.
Mr Ruto promised that those who misadvised the President into making contentious appointments outside the law would have some very tough questions to answer. No heads have rolled since, and that might be because those in Mr Ruto’s crosshairs were not a motley bunch of bureaucrats.
What the Deputy President was letting out, inadvertently or otherwise, is not that some civil servants are giving the President bad advice, but that the President acts on bad advice.
He was distancing himself from the missteps evident in the controversial appointments and throwing the buck upstairs where it belonged.
That was a remarkable development in what has hitherto been seen as dual leadership where the President and his deputy get on so famously. The bonhomie and body language the two put on is unparalleled in Kenyan leadership.
The public jokes at each other’s expense, use of first names, and generally putting on displays of affection indicated that they are the best of friends.
The message Mr Ruto was sending out last week is that the disgruntled acolytes he has been publicly disowning from his Kalenjin side of the Jubilee coalition — Alfred Keter and others — were right after all.
The two Keters, the former a young freshman MP for Nandi Hill and the latter Senator for Kericho and Mr Ruto’s most loyal and trusted ally over the last few years, have been causing waves with claims that key figures loyal to President Kenyatta were instrumental in ‘fixing’ the Deputy President by providing evidence and witnesses for the ICC.
That has been in reference to a few powerful figures from central Kenya inherited from President Kibaki’s government, notably Secretary to the Cabinet Francis Kimemia, Interior Principal Secretary Mutea Iringo, National Intelligence Service director-general Michael Gichangi and State House political advisor Nancy Gitau.
Those were more or less the same figures targeted in a rebellious spiel by President Kenyatta’s director of speechwriting and messaging Eric Ng’eno in a remarkable Op-Ed piece in the Nation. Mr Ng’eno accused unnamed figures of sabotaging the presidency from within and running their own “parallel state”.
At first, the assumption was that Mr Ng’eno was signalling a looming purge at the behest of the President, but it did not take long for it to turn out that his was a continuation of the Keter-Keter campaign that is largely grounded on exploiting Kalenjin discontent within Jubilee.
These signs of disgruntlement are seen in anything from skewed appointments to public office, domination of President Kenyatta’s Kikuyu half of the coalition in key offices and institutions, and even, bizarrely, uneven sharing of the spoils from the looting of public coffers.
When Deputy President Ruto now suggests that the President might be out of touch therefore acting on flawed advice, he seems to be escalating a few notches higher the campaign initially fronted by Charles Keter and then Alfred Keter.
It is this apparent rebellion that has exposed alleged corruption on massive infrastructure projects such as the new Mombasa-Malaba railway line where, it appears, ‘eating’ was restricted to one side of the coalition.
It is probably only in Kenya where a political fallout can be driven, not by ideological or philosophical differences, but by naked fights over looting rights. The drama continues.
Lifting the veil: Inside Sh327b standard gauge railway tender row
Updated Monday, January 13th 2014 at 23:11 GMT +3
By Paul Wafula
Kenya: The cost of the controversial standard gauge railway line from Mombasa to Nairobi rose by Sh107 billion between July 2012 and November last year, Business Beat has learnt.
Further, the Chinese company that was awarded the contract, China Road and Bridge Corporation (CRBC), may already have received about Sh100 billion as a first instalment, even as Parliament and the anti-corruption authority launch investigations into the project.
CRBC is a Chinese state corporation.
These details have emerged as the Government presents a justification document for the price increase, refuting claims that it would cost Kenya Sh1.3 trillion to construct the new line.
Transport Permanent Secretary Nduva Muli insists he will prove to investigating agencies that the total cost of the Nairobi to Mombasa phase of the SGR project will be Sh327 billion.
But this is Sh107 billion more than the Sh220 billion Mr Muli himself had agreed on with the Chinese firm when he awarded it the contract in July 2012.
The result of this nearly 50 per cent increase in costs is that Kenya will now pay Sh315 million to build one kilometre of the 609.3-kilometre line.
Yet, in a statement to Parliament recently, Transport and Infrastructure Cabinet Secretary Michael Kamau told legislators that the country would spend Sh247 million per kilometre, at current exchange rates.
If this first phase rate is maintained for the second phase of the project — between Nairobi to Malaba with a branch line to Kisumu — then Kenyans will have to part with about Sh250 billion more.
The total length of the SGR line is about 1,250km.
Consequences
Investigations by Business Beat into the contract award revealed a rushed process that failed to give Kenya the benefit of competitive bidding that could have presented a cheaper deal.
A source who understands how the deal was negotiated revealed that Kenya did not have an alternative but to accept the terms of the contract after it failed to convince the World Bank to fund the project.
“China does not allow its state corporations to compete among each other. CRBC was the one that scouted for the project, and the fact that it did the feasibility study gave it an edge,†he said.Â
It took slightly over one month to approve the railway project proposal from the Chinese company.
Documents show that CRBC submitted its proposal to Kenya Railways for the construction of the first phase of the SGR line on May 29, 2012. It was handed the contract on July 10 the same year.
The main correspondent on the contract award was Muli, who was the then Kenya Railways’ MD. Mr Li Qiang, CRBC Kenya’s general manager, was the contact person for the Chinese firm.
The award
The award letter was received by CRBC at their offices in Lavington on the day it was signed, and accepted unconditionally, with the Chinese firm agreeing to do the project for Sh220 billion.
A week later, a nine-member team was set up to discuss the finer details of the deal; and the additional costs began to pile up over considerations of terrain, the quality of materials to be used and the required approvals.
Kenya Railways was represented by Mr Solomon Ouna, who was also the chair, Mr Alfred Matheka, Mr David Mwadali, Ms Marianne Kitany and Mr Stanley Gitari.
The minutes of the negotiations show that Mr Yang Jie was the team leader for China Roads, assisted by Mr Xiong Shi Ling, Mr Mo Yong Nian and Mr Zhou Yi Hua.
Another piece of the puzzle in the project is why the same Chinese company that was handed the contract had earlier offered to carry out the feasibility study and preliminary design of the first phase of the SGR project for free — a conflict of interest.
The Government allowed CRBC to undertake the study on August 12, 2009.
It has since emerged that CRBC has been contracted to construct only the first phase of the project, between Mombasa and Nairobi.
“We have not yet awarded the contract for the second phase, which is between Nairobi and Malaba. We will be looking for a new financier and the tender is still open,†Muli said.
But this will do little to quiet the businessmen and brokers who have come out fighting after losing out in the latest round of adjustments to the original contract that have worked in the Chinese contractor’s favour.
For instance, though the initial agreement limited the firm to civil works on the line, the Government has ceded more ground and allowed CRBC to source for rolling stock — the locomotives, passenger coaches and freight wagons — adding an extra Sh95 billion in costs.
The financiers
According to a schedule of payments seen by Business Beat, 30 per cent of the contract price was due to CRBC a month from the date the contract was effected.
This happened before November last year when President Uhuru Kenyatta led three heads of state from the East African region to officially launch the project in Mombasa.
Muli did not confirm or deny if the money had been paid out, but he said the Government would adhere to the terms of the contract.
It also appears that the financiers of the project have reduced the grace period by half, from 10 years to five. This means that Kenyans will start repaying the loan much earlier than anticipated.
“Exim Bank [of China] will finance 85 per cent of the project, and we will raise the rest,†Muli said.
The loan will attract a 2 per cent interest above the London Interbank Offered Rate, commonly known as the Libor.
Libor is the average interest rate leading banks in London estimate they would be charged if borrowing from other banks.
The Libor rate is projected to be at above 2 per cent in 2017, when the loan is due. This means that Kenya will pay at least 4 per cent in interest per year.
This translates to at least Sh1.3 billion per month if the loan is repaid in 30 years.
The start of repayments is planned to coincide with the completion of the first phase of the project.
As per the contractual terms, Exim Bank and the Government must have already released about Sh98.1 billion, at current exchange rates.
Another 10 per cent of the project cost will be due for payment within one month after Kenya Railways issues a letter of commencement. This is expected to happen before April.
The Government also gave Exim Bank a guarantee that the railway line would have at least 35 per cent of the cargo business from the Mombasa Port.
Wy is Cord keeping quiet in such a scandle of this magnitude ?
Is Cord involved with this historical Railway scandle?
Why then this silence from the Cord Side! How much does Cord leaders know about the railway scandle btween Kenya government and the Chinese government?
Inflation will skyrocket
Interest rates through the roof
Collapse of the KES
Mounting unmanageable public debt
Economic collapse of the magnitude unrivaled even by the Goldenberg carcinogen.
William Ruto cannot say ngwee. the guy was paid and now anaambiwa si uikula pesa The moment he lands at the hague uhuru people start screwing with him. i bet you he will be more disgruntled this time around. drama about to emerge. one lesson in politics. never eat corrupt money it can always be used against you.
inflation is creeping in.
Kenyans purchasing power is on the wane with stagnant salaries and increased burden of taxation and high cost of goods and services leaving no savings in the hands of wanainchi.
civil servants have been slapped with caps on expenditure and benefits of office like traveling,training etc compromising service delivery and performance at work place .you saw child dying in nyeri hospital unattended during delivery.
civil servants due for promotion cannot be promoted now.
recruitment of new civil servants is put on hold except few secret ones.
insecurity,fear ,increased cost of education,corruption and massive controls of once liberalized sectors by jubilee is choking everything in Kenya,only jubilant s are happy the rest of Kenya are helpless as jubilee turning Kenya clock back to pre 2002 revolution.every reform of narc era is frowned upon.we are back to kanu.uhuruto are just kanu people with little ideology to run a big country like Kenya
John Githongo exposes Uhuru Kenyatta’s Jubilee underbelly, nine months later
Posted in: Opinion|January 19, 2014
By John Githongo for the Star
Kenya celebrated its 50th anniversary as an independent country last month. I was struck by how low-key it was considering the scale of the milestone.
This was partly because of Nelson Mandela’s death and subsequent funeral. It isn’t in the best of taste to throw too big a party when the continent is mourning its most respected and beloved son.
However, it is also the case that the past nine months since the Jubilee coalition controversially won the election have been challenging ones.
The swagger and hubris of May to September has been somewhat tempered. One simple reason for this is that it is easier to run a campaign than a government; especially a government that you know contains within it a massive bloc of officials whose resentment of you is virulent and seethes below the surface.
Thus it is that those who were thumping their chests in May today plead to be given time to deliver; for the public to cut them some slack as they grapple with multiple governance challenges.
That has not, however, tempered the hubris of commercial types unable to smell the political coffee, who continue to believe that Kenya can grow its way out of its unresolved fundamental political contradictions.
This administration has emerged to be an alliance between the Gikuyu and Kalenjin elites, their followers and the corporate sector narrowly defined.
The youthful Nandi Hills MP, Alfred Keter, has been persistent in warning Deputy President William Ruto essentially that ‘the Gikuyu are out to use and dump’ the Kalenjin in the political alliance that is Jubilee.
While there are some observers who have dismissed this as the mere posturing of coalition partners grumbling that they aren’t being allowed to ‘eat’ enough (partly true), others have argued its indicative of a deeper malaise among the Kalenjin vis-à-vis their already totally unlikely and deeply uncomfortable political marriage. I tend towards the former view.
The alliance’s durability is heavily dependent on impunity with regard to grand corruption. The more the pigs can gorge themselves at the trough, the less whining one will hear out of this regime.
Political events have a habit of knocking the wind out of the sails of a new administration. Then again, the statements of key government officials regarding issues like the ICC and security in particular have been so beyond the pale they have alarmed even Jubilee’s sympathisers. The lies have been so transparent that they have left many observers confused.
The Westgate saga in September, for example, saw the reputation of Interior Cabinet Secretary Joseph ole Lenku take a battering.
But even this damage might have been better contained had it not occurred in a context where the youthful “digital” regime was battling significant challenges on multiple fronts, some of them self-made. Its credibility was first dealt a massive blow by what the kindest of critics might term the incompetence of the electoral body, followed by a Supreme Court judgement that left significant swathes of the country disgruntled and unconvinced about the legitimacy of its mandate.
Distracted by the “personal challenges” of its top leadership in the form of the ICC, it further lost opportunity after opportunity to unite the country behind its ambitious agenda, so much so that the nation’s Golden Jubilee celebrations were marked nationwide, particularly outside Nairobi, by more ambivalence than celebration.
KANU 2.0
The scale of NARC’s victory in 2002 and the diversity of the coalition in those in ‘pre-tyranny of numbers’ days were such that Kenyans allowed the Kibaki administration massive political leeway.
Blunders were excused and even delays in implementing promises were met – at least initially – with public patience and understanding.
Even when the President was taken ill, and a fatal air crash injured and killed some of his ministers early in his tenure, despite the start of squabbles within the coalition over the infamous MOU that was never honoured, the nation was still willing to allow the Kibaki regime time and space to implement the series of significant policy reforms it had promised.
To be fair, Kibaki came to power in radically different circumstances and on the back of a political machine much of which had considerable social capital having spent two decades in opposition.
It was a time of great hope, even for those who had voted for his rival. Despite the fact that Kibaki himself and several of the most influential of his officials had spent most of their professional lives in government rather than outside it, the new regime was perceived as pro-reform.
It rode on the credentials of those who had consistently fought for political transformation for much longer, paying dearly for their defiance and activism in honing a post-Moi change agenda. It is worth remembering, in contrast, that in the latter part of those years of struggle, Kenya’s fourth president Uhuru Kenyatta and his deputy William Ruto were in KANU proper.
Ruto first became a household name in Kenya in association with KANU’s notorious youth wing, Youth for KANU ’92. As for Kenyatta, no less than Moi’s chosen heir, it might have taken ten years to bring the second president’s dream to fruition, but clearly he is on track now to carry out his mandate to extend the Moi era for, as he himself pointed out recently, another twenty years.
JUBILEE: THE HONEYMOON THAT NEVER WAS
Nine months since they came to power, Uhuru and Ruto do not seem to have been granted such a grace period. Their honeymoon with Kenyans – if there ever was one – was the most short-lived in Kenyan history. As a result, from the get-go even simple problems have deteriorated into crises.
The confrontational aggression that characterised the elections right through to the swearing-in of the new Executive has spilled over into the everyday; everything it does is contested. We have, for example, seen multiple events of industrial unrest among entire groups of public servants such as teachers and medical professionals.
We watched our main airport’s arrivals terminal burn down and Senator Mutula Kilonzo die in circumstances that still remain unclear.
Of all the changes anticipated by the constitution, security sector reform has been the slowest and most vexatious. The terrorist attack on Westgate Mall in September was so incompetently handled that it left the reputation of the Kenya Defence Forces (KDF) badly dented and government officials looking confused and inept.
Then, across the country, an apparent collapse in security, combined with the messiness of the transition into devolution has seen deadly violence break out in Tana River, Mandera, Moyale, Bungoma, Trans Nzoia, Mombasa and other counties. Just as troubling, the police seemed unable to unravel the mystery of a bloodied and recently decapitated human head dumped outside the National Police Service Commission offices with a message to the Chair of that Commission on it.
The current police vetting exercise has raised more questions than answers; not only has the public been flabbergasted by the secrets that have come spilling out, the critical issues of the timing of the exercise and the sensitivities of demobilizing even a section of any disciplined force do not seem to have been prepared for.
Hence the anxieties that prompted a prophecy of a dire future for officers so publicly exposed as dishonourably retired, with no prior discussion as to livelihood and security options.
The regime’s response to growing articulation of public dis-ease has been to aggressively move to contract democratic space leading to brazen attempts to muzzle the media, manage civil society and generally exhibit a political thin skin that has been surprising, exhibiting intolerance to criticism that harks back to the 1980s.
The unapologetic ethnic insensitivity with regard to public appointments, and the defiant attitude with which criticism has been fended off, seems to be a calculated message dismissing as inconsequential and petty all those who question the regime. And then there has been the rather unusual development in the form of an unexpected article by the President’s speechwriter, Eric Ng’eno, complaining about sabotage by old-school bureaucrats in the system.
The last time a relatively junior official railed against colleagues above his pay grade with such confidence was in 1983, during the Moi era, when the then chief inspector of motor vehicles, Kuria Kanyingi, went on the offensive with the ‘traitor’ narrative. History reminds us that this was concocted to remove the then powerful minister Charles Njonjo from public service in a manner that also ended his political career.
The general feeling of many observers is that there was no way Ng’eno could have been speaking for himself; the bets are on that he has clearly been given the nod to cry wolf loudly and wring his hands wildly for the public. Some have argued that he is simply laying the ground for a coming purge of the civil service.
Others speculate that internal contradictions within the coalition forged by the ICC are beginning to cause a very public fraying at the political edges, an opinion that is gaining currency with the repeated amplification of dis-ease alluded to earlier, led by the relatively junior first-time member of the national assembly, Alfred Keter.
The Executive has fast-tracked all manner of economic projects while the grand political one of nation-building seems to have been parked for a while.
Whatever happens at the Hague, the ICC process will change this order of priorities. At the end of the day, Kenyans are beginning to come to terms with the fact that the 2007/8 post-election violence and other atrocities that have helped define the most powerful resentments in our society will ultimately require a comprehensive political solution for true closure to be found.
Dishing out cash and title deeds won’t cut it, nor will rewarding sycophancy and political support at the expense of national unity. In this sense, it is a crying shame that the Bethwell Kiplagat – led Truth and Reconciliation Commission was still-born.
Kenya doesn’t have an Archbishop Desmond Tutu, Still, one prays that ultimately someone that the political elite will actually listen to – our religious leaders perhaps – will have the wisdom and courage to speak the truth to power and the selflessness to do whatever it takes to bring about true reconciliation in Kenya.
There are many angles, but from what I can piece together, CBRC tendered and won based on deceptive info they gave including the shareholding of the company. That time it is like the Kalenjin axis (Kulei and Lagat) was in control and Ruto was in the loop.
At some point UK (the President) asked why it was taking so long. His inner guys did not want Kalenjins to make money out of it. So they told the president; “people were eating.” UK said he wanted all details. He quickly discovered that the contract was overpriced by 20%. He then talked with China Rail directly. They said they could do it for 20% less (cost without crbc cut). He then asked crbc what minimum they could take since they had already won the tender. That’s where possibly a deal was done on the excess over the real cost. Some say both Raila and UK ate 36B or roughly 10% leaving crbc with 5% and reducing overall cost by 5%.
But there are so many other versions. What is clear is that Kalenjins are livid and feel it was their deal and it would have made them ready for 2017 but Ruto failed them. Thedeal was thatthe railways was a Kalenjin project while the laptops were a TNA domain.
Incidentally there is a battle between UK inner circle and Ruto. They want it to be clear to him that he is not on par with UK and that if he wants anything he must go through them. Ruto meanwhile gets to know the presidents diary and comes for all meetings, functions that will make media headlines or are otherwise strategic.
Kenya Stockholm Blog 
http://www.presstv.ir/detail/2014/01/13/345406/igad-makes-major-progress-in-s-sudan-peace-talks/
MP Alfred Keter has raised pertinent issues concerning the standard gauge railway project. As usual, Jubilee sycophants are demonizing him by claiming he is being sponsored to ‘make noise’ by someone who did not secure the construction deal. Why build a single-track railway at an exorbitant cost, yet the examples of other African countries indicate lower costs for double tracks? This is a potential mega-scandal for Uhuru’s government just like Moi had Goldenberg and Kibaki, the Anglo-Leasing scandal. The Ethics and Anti-Corruption Commission should launch an investigation into the matter.
Meanwhile, Deputy President William Ruto is trying hard to calm the Kalenjins who feel short-changed by President Uhuru Kenyatta’s top State job appointments favoring the Kikuyu community. All is not well in Jubilee because Ruto’s KES 4 billion budget for running his operations was withdrawn and transferred to State House. He now begs for money to buy toilet paper. Since when did a vice president have Executive powers in Kenya? Further, his close ally Senator Charles Keter alleged publicly towards the end of 2013, that some of the officers appointed by Uhuru were responsible for ‘fixing’ Ruto at the ICC. The Senator has since changed tune and supports the appointments.
The happy days of Uhuruto wearing matching shirts and ties are over. Ruto can only use proxies like Alfred Keter to fight the Mount Kenya Mafia. If he personally criticizes Uhuru, his goose will be cooked. Ruto should expect further political betrayal once he resumes trial at The Hague.
Monday, January 13, 2014
Has Ruto let the cat out of the bag with his lament about bad advice?
Following Deputy President William Ruto’s assertion last week that President Kenyatta was being misled by advisors, one would expect a whole slew of senior functionaries at State House, the Office of the President, the State Law Office, cabinet offices, and other places where advice is sought, to be taking cover.
Mr Ruto promised that those who misadvised the President into making contentious appointments outside the law would have some very tough questions to answer. No heads have rolled since, and that might be because those in Mr Ruto’s crosshairs were not a motley bunch of bureaucrats.
What the Deputy President was letting out, inadvertently or otherwise, is not that some civil servants are giving the President bad advice, but that the President acts on bad advice.
He was distancing himself from the missteps evident in the controversial appointments and throwing the buck upstairs where it belonged.
That was a remarkable development in what has hitherto been seen as dual leadership where the President and his deputy get on so famously. The bonhomie and body language the two put on is unparalleled in Kenyan leadership.
The public jokes at each other’s expense, use of first names, and generally putting on displays of affection indicated that they are the best of friends.
The message Mr Ruto was sending out last week is that the disgruntled acolytes he has been publicly disowning from his Kalenjin side of the Jubilee coalition — Alfred Keter and others — were right after all.
The two Keters, the former a young freshman MP for Nandi Hill and the latter Senator for Kericho and Mr Ruto’s most loyal and trusted ally over the last few years, have been causing waves with claims that key figures loyal to President Kenyatta were instrumental in ‘fixing’ the Deputy President by providing evidence and witnesses for the ICC.
That has been in reference to a few powerful figures from central Kenya inherited from President Kibaki’s government, notably Secretary to the Cabinet Francis Kimemia, Interior Principal Secretary Mutea Iringo, National Intelligence Service director-general Michael Gichangi and State House political advisor Nancy Gitau.
Those were more or less the same figures targeted in a rebellious spiel by President Kenyatta’s director of speechwriting and messaging Eric Ng’eno in a remarkable Op-Ed piece in the Nation. Mr Ng’eno accused unnamed figures of sabotaging the presidency from within and running their own “parallel state”.
At first, the assumption was that Mr Ng’eno was signalling a looming purge at the behest of the President, but it did not take long for it to turn out that his was a continuation of the Keter-Keter campaign that is largely grounded on exploiting Kalenjin discontent within Jubilee.
These signs of disgruntlement are seen in anything from skewed appointments to public office, domination of President Kenyatta’s Kikuyu half of the coalition in key offices and institutions, and even, bizarrely, uneven sharing of the spoils from the looting of public coffers.
When Deputy President Ruto now suggests that the President might be out of touch therefore acting on flawed advice, he seems to be escalating a few notches higher the campaign initially fronted by Charles Keter and then Alfred Keter.
It is this apparent rebellion that has exposed alleged corruption on massive infrastructure projects such as the new Mombasa-Malaba railway line where, it appears, ‘eating’ was restricted to one side of the coalition.
It is probably only in Kenya where a political fallout can be driven, not by ideological or philosophical differences, but by naked fights over looting rights. The drama continues.
Lifting the veil: Inside Sh327b standard gauge railway tender row
Updated Monday, January 13th 2014 at 23:11 GMT +3
By Paul Wafula
Kenya: The cost of the controversial standard gauge railway line from Mombasa to Nairobi rose by Sh107 billion between July 2012 and November last year, Business Beat has learnt.
Further, the Chinese company that was awarded the contract, China Road and Bridge Corporation (CRBC), may already have received about Sh100 billion as a first instalment, even as Parliament and the anti-corruption authority launch investigations into the project.
CRBC is a Chinese state corporation.
These details have emerged as the Government presents a justification document for the price increase, refuting claims that it would cost Kenya Sh1.3 trillion to construct the new line.
Transport Permanent Secretary Nduva Muli insists he will prove to investigating agencies that the total cost of the Nairobi to Mombasa phase of the SGR project will be Sh327 billion.
But this is Sh107 billion more than the Sh220 billion Mr Muli himself had agreed on with the Chinese firm when he awarded it the contract in July 2012.
The result of this nearly 50 per cent increase in costs is that Kenya will now pay Sh315 million to build one kilometre of the 609.3-kilometre line.
Yet, in a statement to Parliament recently, Transport and Infrastructure Cabinet Secretary Michael Kamau told legislators that the country would spend Sh247 million per kilometre, at current exchange rates.
If this first phase rate is maintained for the second phase of the project — between Nairobi to Malaba with a branch line to Kisumu — then Kenyans will have to part with about Sh250 billion more.
The total length of the SGR line is about 1,250km.
Consequences
Investigations by Business Beat into the contract award revealed a rushed process that failed to give Kenya the benefit of competitive bidding that could have presented a cheaper deal.
A source who understands how the deal was negotiated revealed that Kenya did not have an alternative but to accept the terms of the contract after it failed to convince the World Bank to fund the project.
“China does not allow its state corporations to compete among each other. CRBC was the one that scouted for the project, and the fact that it did the feasibility study gave it an edge,†he said.Â
It took slightly over one month to approve the railway project proposal from the Chinese company.
Documents show that CRBC submitted its proposal to Kenya Railways for the construction of the first phase of the SGR line on May 29, 2012. It was handed the contract on July 10 the same year.
The main correspondent on the contract award was Muli, who was the then Kenya Railways’ MD. Mr Li Qiang, CRBC Kenya’s general manager, was the contact person for the Chinese firm.
The award
The award letter was received by CRBC at their offices in Lavington on the day it was signed, and accepted unconditionally, with the Chinese firm agreeing to do the project for Sh220 billion.
A week later, a nine-member team was set up to discuss the finer details of the deal; and the additional costs began to pile up over considerations of terrain, the quality of materials to be used and the required approvals.
Kenya Railways was represented by Mr Solomon Ouna, who was also the chair, Mr Alfred Matheka, Mr David Mwadali, Ms Marianne Kitany and Mr Stanley Gitari.
The minutes of the negotiations show that Mr Yang Jie was the team leader for China Roads, assisted by Mr Xiong Shi Ling, Mr Mo Yong Nian and Mr Zhou Yi Hua.
Another piece of the puzzle in the project is why the same Chinese company that was handed the contract had earlier offered to carry out the feasibility study and preliminary design of the first phase of the SGR project for free — a conflict of interest.
The Government allowed CRBC to undertake the study on August 12, 2009.
It has since emerged that CRBC has been contracted to construct only the first phase of the project, between Mombasa and Nairobi.
“We have not yet awarded the contract for the second phase, which is between Nairobi and Malaba. We will be looking for a new financier and the tender is still open,†Muli said.
But this will do little to quiet the businessmen and brokers who have come out fighting after losing out in the latest round of adjustments to the original contract that have worked in the Chinese contractor’s favour.
For instance, though the initial agreement limited the firm to civil works on the line, the Government has ceded more ground and allowed CRBC to source for rolling stock — the locomotives, passenger coaches and freight wagons — adding an extra Sh95 billion in costs.
The financiers
According to a schedule of payments seen by Business Beat, 30 per cent of the contract price was due to CRBC a month from the date the contract was effected.
This happened before November last year when President Uhuru Kenyatta led three heads of state from the East African region to officially launch the project in Mombasa.
Muli did not confirm or deny if the money had been paid out, but he said the Government would adhere to the terms of the contract.
It also appears that the financiers of the project have reduced the grace period by half, from 10 years to five. This means that Kenyans will start repaying the loan much earlier than anticipated.
“Exim Bank [of China] will finance 85 per cent of the project, and we will raise the rest,†Muli said.
The loan will attract a 2 per cent interest above the London Interbank Offered Rate, commonly known as the Libor.
Libor is the average interest rate leading banks in London estimate they would be charged if borrowing from other banks.
The Libor rate is projected to be at above 2 per cent in 2017, when the loan is due. This means that Kenya will pay at least 4 per cent in interest per year.
This translates to at least Sh1.3 billion per month if the loan is repaid in 30 years.
The start of repayments is planned to coincide with the completion of the first phase of the project.
As per the contractual terms, Exim Bank and the Government must have already released about Sh98.1 billion, at current exchange rates.
Another 10 per cent of the project cost will be due for payment within one month after Kenya Railways issues a letter of commencement. This is expected to happen before April.
The Government also gave Exim Bank a guarantee that the railway line would have at least 35 per cent of the cargo business from the Mombasa Port.
This is likely to drive Rift Valley Railways (RVR), which won a 25-year concession to operate the railway, out of business.
http://www.standardmedia.co.ke/business/article/2000102273/lifting-the-veil-inside-sh327b-standard-gauge-railway-tender-row?pageNo=4
Wy is Cord keeping quiet in such a scandle of this magnitude ?
Is Cord involved with this historical Railway scandle?
Why then this silence from the Cord Side! How much does Cord leaders know about the railway scandle btween Kenya government and the Chinese government?
Inflation will skyrocket
Interest rates through the roof
Collapse of the KES
Mounting unmanageable public debt
Economic collapse of the magnitude unrivaled even by the Goldenberg carcinogen.
Galana/Kulalu irrigation scheme – Sh250 billion
Mombasa-Malaba Standard Gauge Railway – Sh580 billion
JKIA Greenfields Terminal – Sh55.6 billion
Outering Rd Superhighway – Sh10 billion
Lapsset – 1.2 trillion
All done by 2017!
William Ruto cannot say ngwee. the guy was paid and now anaambiwa si uikula pesa The moment he lands at the hague uhuru people start screwing with him. i bet you he will be more disgruntled this time around. drama about to emerge. one lesson in politics. never eat corrupt money it can always be used against you.
http://www.bbc.co.uk/news/world-africa-25718785
I seem to differ with you Mr Okoth most of the times. But this time, yes I agree. This contracts should be scrutinized very carefully.
KSB: John: As human beings, we cannot agree on everything.
inflation is creeping in.
Kenyans purchasing power is on the wane with stagnant salaries and increased burden of taxation and high cost of goods and services leaving no savings in the hands of wanainchi.
civil servants have been slapped with caps on expenditure and benefits of office like traveling,training etc compromising service delivery and performance at work place .you saw child dying in nyeri hospital unattended during delivery.
civil servants due for promotion cannot be promoted now.
recruitment of new civil servants is put on hold except few secret ones.
insecurity,fear ,increased cost of education,corruption and massive controls of once liberalized sectors by jubilee is choking everything in Kenya,only jubilant s are happy the rest of Kenya are helpless as jubilee turning Kenya clock back to pre 2002 revolution.every reform of narc era is frowned upon.we are back to kanu.uhuruto are just kanu people with little ideology to run a big country like Kenya
Nairobi terrorist attack>
http://mobile.nation.co.ke/news/Secrets-of-Harun-Mwau-drug-letter-to–Mututho/-/1950946/2151338/-/format/xhtml/-/rhra0gz/-/index.html
John Githongo exposes Uhuru Kenyatta’s Jubilee underbelly, nine months later
Posted in: Opinion|January 19, 2014
By John Githongo for the Star
Kenya celebrated its 50th anniversary as an independent country last month. I was struck by how low-key it was considering the scale of the milestone.
This was partly because of Nelson Mandela’s death and subsequent funeral. It isn’t in the best of taste to throw too big a party when the continent is mourning its most respected and beloved son.
However, it is also the case that the past nine months since the Jubilee coalition controversially won the election have been challenging ones.
The swagger and hubris of May to September has been somewhat tempered. One simple reason for this is that it is easier to run a campaign than a government; especially a government that you know contains within it a massive bloc of officials whose resentment of you is virulent and seethes below the surface.
Thus it is that those who were thumping their chests in May today plead to be given time to deliver; for the public to cut them some slack as they grapple with multiple governance challenges.
That has not, however, tempered the hubris of commercial types unable to smell the political coffee, who continue to believe that Kenya can grow its way out of its unresolved fundamental political contradictions.
This administration has emerged to be an alliance between the Gikuyu and Kalenjin elites, their followers and the corporate sector narrowly defined.
The youthful Nandi Hills MP, Alfred Keter, has been persistent in warning Deputy President William Ruto essentially that ‘the Gikuyu are out to use and dump’ the Kalenjin in the political alliance that is Jubilee.
While there are some observers who have dismissed this as the mere posturing of coalition partners grumbling that they aren’t being allowed to ‘eat’ enough (partly true), others have argued its indicative of a deeper malaise among the Kalenjin vis-à-vis their already totally unlikely and deeply uncomfortable political marriage. I tend towards the former view.
The alliance’s durability is heavily dependent on impunity with regard to grand corruption. The more the pigs can gorge themselves at the trough, the less whining one will hear out of this regime.
Political events have a habit of knocking the wind out of the sails of a new administration. Then again, the statements of key government officials regarding issues like the ICC and security in particular have been so beyond the pale they have alarmed even Jubilee’s sympathisers. The lies have been so transparent that they have left many observers confused.
The Westgate saga in September, for example, saw the reputation of Interior Cabinet Secretary Joseph ole Lenku take a battering.
But even this damage might have been better contained had it not occurred in a context where the youthful “digital” regime was battling significant challenges on multiple fronts, some of them self-made. Its credibility was first dealt a massive blow by what the kindest of critics might term the incompetence of the electoral body, followed by a Supreme Court judgement that left significant swathes of the country disgruntled and unconvinced about the legitimacy of its mandate.
Distracted by the “personal challenges” of its top leadership in the form of the ICC, it further lost opportunity after opportunity to unite the country behind its ambitious agenda, so much so that the nation’s Golden Jubilee celebrations were marked nationwide, particularly outside Nairobi, by more ambivalence than celebration.
KANU 2.0
The scale of NARC’s victory in 2002 and the diversity of the coalition in those in ‘pre-tyranny of numbers’ days were such that Kenyans allowed the Kibaki administration massive political leeway.
Blunders were excused and even delays in implementing promises were met – at least initially – with public patience and understanding.
Even when the President was taken ill, and a fatal air crash injured and killed some of his ministers early in his tenure, despite the start of squabbles within the coalition over the infamous MOU that was never honoured, the nation was still willing to allow the Kibaki regime time and space to implement the series of significant policy reforms it had promised.
To be fair, Kibaki came to power in radically different circumstances and on the back of a political machine much of which had considerable social capital having spent two decades in opposition.
It was a time of great hope, even for those who had voted for his rival. Despite the fact that Kibaki himself and several of the most influential of his officials had spent most of their professional lives in government rather than outside it, the new regime was perceived as pro-reform.
It rode on the credentials of those who had consistently fought for political transformation for much longer, paying dearly for their defiance and activism in honing a post-Moi change agenda. It is worth remembering, in contrast, that in the latter part of those years of struggle, Kenya’s fourth president Uhuru Kenyatta and his deputy William Ruto were in KANU proper.
Ruto first became a household name in Kenya in association with KANU’s notorious youth wing, Youth for KANU ’92. As for Kenyatta, no less than Moi’s chosen heir, it might have taken ten years to bring the second president’s dream to fruition, but clearly he is on track now to carry out his mandate to extend the Moi era for, as he himself pointed out recently, another twenty years.
JUBILEE: THE HONEYMOON THAT NEVER WAS
Nine months since they came to power, Uhuru and Ruto do not seem to have been granted such a grace period. Their honeymoon with Kenyans – if there ever was one – was the most short-lived in Kenyan history. As a result, from the get-go even simple problems have deteriorated into crises.
The confrontational aggression that characterised the elections right through to the swearing-in of the new Executive has spilled over into the everyday; everything it does is contested. We have, for example, seen multiple events of industrial unrest among entire groups of public servants such as teachers and medical professionals.
We watched our main airport’s arrivals terminal burn down and Senator Mutula Kilonzo die in circumstances that still remain unclear.
Of all the changes anticipated by the constitution, security sector reform has been the slowest and most vexatious. The terrorist attack on Westgate Mall in September was so incompetently handled that it left the reputation of the Kenya Defence Forces (KDF) badly dented and government officials looking confused and inept.
Then, across the country, an apparent collapse in security, combined with the messiness of the transition into devolution has seen deadly violence break out in Tana River, Mandera, Moyale, Bungoma, Trans Nzoia, Mombasa and other counties. Just as troubling, the police seemed unable to unravel the mystery of a bloodied and recently decapitated human head dumped outside the National Police Service Commission offices with a message to the Chair of that Commission on it.
The current police vetting exercise has raised more questions than answers; not only has the public been flabbergasted by the secrets that have come spilling out, the critical issues of the timing of the exercise and the sensitivities of demobilizing even a section of any disciplined force do not seem to have been prepared for.
Hence the anxieties that prompted a prophecy of a dire future for officers so publicly exposed as dishonourably retired, with no prior discussion as to livelihood and security options.
The regime’s response to growing articulation of public dis-ease has been to aggressively move to contract democratic space leading to brazen attempts to muzzle the media, manage civil society and generally exhibit a political thin skin that has been surprising, exhibiting intolerance to criticism that harks back to the 1980s.
The unapologetic ethnic insensitivity with regard to public appointments, and the defiant attitude with which criticism has been fended off, seems to be a calculated message dismissing as inconsequential and petty all those who question the regime. And then there has been the rather unusual development in the form of an unexpected article by the President’s speechwriter, Eric Ng’eno, complaining about sabotage by old-school bureaucrats in the system.
The last time a relatively junior official railed against colleagues above his pay grade with such confidence was in 1983, during the Moi era, when the then chief inspector of motor vehicles, Kuria Kanyingi, went on the offensive with the ‘traitor’ narrative. History reminds us that this was concocted to remove the then powerful minister Charles Njonjo from public service in a manner that also ended his political career.
The general feeling of many observers is that there was no way Ng’eno could have been speaking for himself; the bets are on that he has clearly been given the nod to cry wolf loudly and wring his hands wildly for the public. Some have argued that he is simply laying the ground for a coming purge of the civil service.
Others speculate that internal contradictions within the coalition forged by the ICC are beginning to cause a very public fraying at the political edges, an opinion that is gaining currency with the repeated amplification of dis-ease alluded to earlier, led by the relatively junior first-time member of the national assembly, Alfred Keter.
The Executive has fast-tracked all manner of economic projects while the grand political one of nation-building seems to have been parked for a while.
Whatever happens at the Hague, the ICC process will change this order of priorities. At the end of the day, Kenyans are beginning to come to terms with the fact that the 2007/8 post-election violence and other atrocities that have helped define the most powerful resentments in our society will ultimately require a comprehensive political solution for true closure to be found.
Dishing out cash and title deeds won’t cut it, nor will rewarding sycophancy and political support at the expense of national unity. In this sense, it is a crying shame that the Bethwell Kiplagat – led Truth and Reconciliation Commission was still-born.
Kenya doesn’t have an Archbishop Desmond Tutu, Still, one prays that ultimately someone that the political elite will actually listen to – our religious leaders perhaps – will have the wisdom and courage to speak the truth to power and the selflessness to do whatever it takes to bring about true reconciliation in Kenya.
Controversial railways project tribal politics angle
They told the president “people were eating”
There are many angles, but from what I can piece together, CBRC tendered and won based on deceptive info they gave including the shareholding of the company. That time it is like the Kalenjin axis (Kulei and Lagat) was in control and Ruto was in the loop.
At some point UK (the President) asked why it was taking so long. His inner guys did not want Kalenjins to make money out of it. So they told the president; “people were eating.” UK said he wanted all details. He quickly discovered that the contract was overpriced by 20%. He then talked with China Rail directly. They said they could do it for 20% less (cost without crbc cut). He then asked crbc what minimum they could take since they had already won the tender. That’s where possibly a deal was done on the excess over the real cost. Some say both Raila and UK ate 36B or roughly 10% leaving crbc with 5% and reducing overall cost by 5%.
But there are so many other versions. What is clear is that Kalenjins are livid and feel it was their deal and it would have made them ready for 2017 but Ruto failed them. Thedeal was thatthe railways was a Kalenjin project while the laptops were a TNA domain.
Incidentally there is a battle between UK inner circle and Ruto. They want it to be clear to him that he is not on par with UK and that if he wants anything he must go through them. Ruto meanwhile gets to know the presidents diary and comes for all meetings, functions that will make media headlines or are otherwise strategic.