The Kenya Ports Authority (KPA) tendering team is split over the award of lucrative contracts for the proposed Sh56 billion Dongo Kundu Special Economic Zone at the Port of Mombasa, threatening to delay the project.
The 11-member tender committee is split into two factions over the firms to award the multibillion-shilling construction deal amid claims that bidders have infiltrated the KPA.
One of the factions has six members and the other has five in the wake of claims that the larger group intends to slant the outcome of the tender, three persons familiar with the project have revealed.
Business Daily has learned that two firms – Toyo Construction Company Ltd and Toa Construction Corporation – have emerged top in the race for the big-money deal.
The opposing faction claims that one of the bidders is influencing the tendering committee amid claims that powerful forces within the KPA and the Japan International Co-operation Agency (JICA) are favouring a particular company.
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 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 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 finance 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. The project is part of Kenya’s industrialisation plan, boosted by the revised draft SEZ Regulations (2019), which offer incentives to companies operating at the zone.
The tender fights and claims of irregular dealings risk derailing the financing and timely completion of the multibillion-shilling project. Claims of collusion first emerged in December when terms of the tender advertised in November were amended in what was seen as a plot to eliminate some bidders from the project.
“Further to our submission to you, vide letter reference PDM/2/4/1 dated 31st August 2022, and your subsequent concurrence letter, vide Ref TC-22- 358™ dated 17th October 2022, and follow-up meetings that have been held in respect to the above subject, we seek your confirmation in amending the eligibility and qualifications subsection,” reads a letter dated December 7, 2022 from then KPA’s acting managing director, John Mwangemi, to JICA Kenya chief representative Iwama Hajime.
At the heart of the request was extension of the time period for the tender from the current five to 10 years, to up to 15 years, to suit particular companies.
There are possibilities of the tender wars leading to a freeze of Japanese funding amid a push for internal investigations.
Mr Mwangemi declined to comment when contacted by the Business Daily.
By the time of going to press, KPA Managing Director William Ruto had not responded to our queries. Sources familiar with the tendering reckon that local JICA officials are taking sides in the tender war. JICA’s local representative Steve Mogere didn’t respond to a request for comment.
Editor’s note: This story has been revised to remove quote erroneously attributed to John Mwangemi instead of his predecessor Rashid Salim. We apologise for the error.
