Weak procurement rules likely to cost Treasury billions

By John Njiraini

Failure by the Government to adhere to public procurement regulations could cost taxpayers over Sh1 billion.

This is, if the Ministry of Industrialisation goes ahead to terminate a three-year contract awarded to Geo Chem Middle East, a fuel inspection agency. At stake is close to Sh500 million invested in laboratory equipment and inspection facilities by this Dubai-based firm, which has also put in a $500,000 performance bond.

The fact that suspension of Geo Chem’s contract is not due to any breach now exposes the Government to litigation. It is unclear why Kenya Bureau of Statistics (Kebs) got the nod from the Ministry of Energy to appoint Geo Chem.

Intense lobbying and pressure has been ongoing with the onslaught led by a powerful cartel of oil dealers urging for this deal to be scrapped. In the meantime, motorists have been paying more for fuel as pump prices increase, while oil firms point fingers to monies collected by Kebs for fuel inspection, for this situation.

Secret Letter

A confidential letter dated March 17, 2010, from John Lonyangapuo, the Permanent Secretary, Ministry of Industrialisation copied to Ministry of Energy, Head of the Public Service and PS, Ministry of Finance, provides details of a meeting that was held on March 15, 2010.

This meeting, between officials of Kebs, Petroleum Institute of East Africa, Public Procurement Oversight Authority and the Industrialisation ministry, that is cited to have agreed on terminating the the Geo Chem contract.

The firm’s inspection mandate covers imported black and white oils.