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Leaders look for highest bidder to ‘auction’ State

BUSINESS
By | April 5th 2009

By Juma Kwayera

Billed as an effective instrument through which the cash-strapped Government can tap into funding from the private sector, the public-private partnership mechanism is raising concerns the country is being auctioned.

The business and legal fraternities expressed the fears when the State belatedly gazetted public-private partnerships (PPPs) regulations last week after it went on prime property selling spree that runs into billions of shillings in Nairobi, the Coast and northern Kenya, where the Government envisages to build a resort city.

Since late last year, the Government has been on shopping spree for investments in the transport, aviation, agriculture, oil and hotel industry. Kenya enlisted Qatari and Kuwaiti firms to develop the Lamu seaport and related infrastructure.

Kuwaiti contract

Transport PS Gerishon Ikiara made the announcement in 2007 when he confirmed the contract awarded to Al Bader International Development Company of Kuwait had been approved by the Cabinet.

The Government has also leased out 100,000 hectares of Tana River basin to the Qatar government for 80 years to grow food in exchange for the construction of the port at $4.8 billion (Sh350 billion).

Ndubi questioned the efficacy of the new regulations published by Finance Minister Uhuru Kenyatta on March 10 in the Kenya Gazette Supplement. They compel procuring agencies to benchmark the deals on value for money, transaction advisor, steering committee and a permanent secretariat.

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The regulations also provide for an oversight body to vet all the partnerships. However, Ndubi pointed out the requirements were flouted "and there is now real fear the so-called foreign firms are Kenyan foreign registered companies."

The lawyer told The Standard on Sunday there is questionable eagerness in the Government to secretly sell, concession or lease public property.

"The partnerships are another avenue for corruption," he said.

Fears that the PPPs are a new front for corruption first came to public attention last year during the controversial disposal of the Grand Regency Hotel by Central Bank. The deal was one of those executed without regard to laid down procedures.

The Kenya Airports Authority (KAA) has signed Sh28 billion deal with the Qatar-based Afro-Asian Investment Corporation to build a five-star three-tower hotel on a 90-acre land at the Jomo Kenyatta International Airport. The hotel complex with a 750-bed capacity and a 200-inpatient capacity hospital will be completed in 2012.

The deals were sealed with Sheikh Hamad bin Khalifa Al Thani during President Kibaki’s visit to the oil-rich emirate last November.

The PPPs provide that such contracts be cleared by an oversight committee, whose members include permanent secretaries in the ministries of Finance and Planning and Vision 2030. The committee has not been constituted.

The recent deals smack of the controversial transfer of Government shareholding in hitherto quasi-state-owned telecommunication firms, Safaricom and Telkom Kenya, whose privatisation raised serious questions about transparency.

The Standard on Sunday has since Wednesday tried to reach Planning Minister Wycliffe Oparanya, under whose docket Vision 2030 falls, without success. Attempts to get Parliamentary Investment Committee Chairman Mithika Linturi to shade light on the foreign investment deals flopped after the Igembe South MP received The Standard on Sunday call only to disconnect when asked about the information his committee has on the investments. He did not answer subsequent calls from Wednesday afternoon to Friday.

Selling spree

Transparency International (Kenya) Director Job Ogonda concurred with Ndubi’s observations that the state is on selling spree. He said the mechanism picked momentum after the Government published an economic development prospectus designed to transform Kenya into a newly industrialised nation by 2030.

The development programme, estimated to cost Sh1.7 trillion, has unleashed a scramble for resources in the private sector. However, the execution of the economic blueprint is raising concern the Executive is auctioning national resources to foreigners.

The hunger for financial capital has escalated public fears of a looming rip-off after the Government executed five mega-shilling projects within a short period with little evidence, if any, of viability of the deals in the plum infrastructure, agriculture, transport, aviation and hotel industries.

The duration of the partnerships, some in the form of concessions, will be valid for as long 80 years, implying even children born after the country goes to polls in 2012 will never own these resources even if life expectancy rose to 75 years.

Aware of growing public concerns that the control of lucrative economic sectors was being vested in private hands, the Government grafted a build, own, operate and transfer provision in the PPPs regulations to cushion itself against potential legal questions. The new regulations, it appears, are being implemented retroactively to justify and legalise the actions.

Ogonda, a lawyer, said the multibillion-shilling deals have raised questions about governance and transparency issues. Ndubi concurred, but added the Government had found another avenue to sell off public property corruptly.

"There is a possibility that the so-called foreign partners are Kenyan-owned firms but incorporated in foreign countries. Ordinarily, national land cannot be alienated and given to foreigners without them being vetted," the lawyer said, citing the controversy around Mobitelea, which had a five per cent stake in Safaricom. Mobitelea is alleged to be a Kenyan-owned company incorporated abroad.

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