Economy
Japan’s JICA disagrees with KPA in Sh59bn tender fights
Friday April 21 2023
The Sh56 billion Dongo Kundu Special Economic Zone at the Port of Mombasa is part of Kenya’s industrialisation plan, boosted by the revised draft SEZ Regulations (2019), which offer incentives to companies operating at the zone. FILE PHOTO | NMG
Tension is brewing between the Kenya Ports Authority (KPA) and a Japanese government agency over tenders for the construction of a Sh56 billion special economic zone at the Port of Mombasa.
The Japan International Cooperation Agency (JICA) has, for a second time, rejected KPA’s decision to disqualify one bidder on account of “minor” oversights that are not crucial to the tender evaluation stage, persons familiar with the project have revealed.
The differences between JICA and the KPA have been triggered by the move to exclude a top firm in bidding for the big-money deal—which has attracted powerful forces in government keen on influencing the multi-billion shilling tenders.
KPA disqualified the bidder for submitting legal documents based on a wrong interpretation of JICA’s procurement policies.
The Japanese agency holds that nitpicking on non-essential shortcomings will discourage competition in the bidding process, and upend its procurement policies that encourage the review of multiple bids.
JICA’s position comes in the wake of claims that bidders and powerful State officials have infiltrated the tendering to try to slant the outcome of the tender.
Read: Tender intrigues rock Sh59bn KPA’s special economic zones
The tenders, which were advertised late last year, will see the successful bidder set up key facilities on a 3,000-acre piece of land, with the developments expected to boost the economy of Mombasa and the rest of the country.
The contractor is expected to dredge a special berth, clear the site, build facilities, including the administration building, and set up a security system and information and communication technology hub.
This entails the construction of a free trade zone, port, logistics hub and industrial zone where companies using the Mombasa Port would be allocated space to set up depots.
Dredging of the berth will include widening and reclaiming of land for the project.
According to the financial proposal, the whole project will be under a JICA loan scheme structured as a Sh6 billion grant and a Sh50 billion concessional loan payable within 30 years and a grace period of 12 years.
The project is part of Kenya’s industrialisation plan, boosted by the revised draft SEZ Regulations (2019), which offer incentives to companies operating in the zone.
While KPA has been tasked with procurement, it is required to submit an evaluation report to JICA for confirmation that all relevant laws and policies have been followed in selecting a contractor.
The tendering is being done under JICA’s procurement policies as a condition of the funding package offered by the Japanese agency.
The Japanese agency has also faulted KPA for failing to seek clarification from the disqualified bidder.
KPA had claimed that seeking such clarification would be seen as bending the rules for a specific bidder.
JICA has cited KPA’s procurement policies that allow the State agency to seek further information from bidders for non-essential aspects of their bids.
This emerges in the middle of divisions on the KPA’s tendering team over the award of lucrative contracts for the Sh56 billion Dongo Kundu project.
The 11-member tender committee is split into two factions over the firms to award the multi-billion shilling construction deal.
The tender fights and claims of irregular dealings risk derailing the financing and timely completion of the project.
Read: EACC moves to court over excavation tender at KPA
Claims of collusion first emerged in December when the terms of the tender advertised in November were amended in what was seen as a plot to eliminate some bidders from the project.
There are possibilities of the tender wars leading to a freeze of Japanese funding amid a push for internal investigations.
