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Chinese firms fight over Sh20 billion dam on River Nyando

By Macharia Kamau and Kamau Muthoni | May 13th 2021 | 6 min read
Water rages past a bridge in Ahero, Kisumu County, after River Nyando broke its banks in April last year. [Dennish Ochieng, Standard]

The planned construction of a Sh20 billion water dam along Kisumu’s River Nyando has hit a false start after two Chinese companies that bid for the job opened a vicious legal battle over the award of the tender.

China Gezhouba, one of the firms that bid for the job, has moved to the procurement review board to contest award of the tender to China Jiangxi Economic Cooperation citing irregularities in the tendering process.

China Gezhouba, which placed a Sh19.2 billion bid for the job reckons that the National Water Harvesting and Storage Authority’s (NWHSA) decision to award the contract to China Jiangxi was irregular and unfair as the rival firm had placed a higher bid of Sh19.9 billion.

Public procurement regulations require that prequalification to evaluate a bidder’s ability to perform the contract obligations is done before the process moves to the technical and financial evaluation stage which awards the contract to ‘the lowest evaluated bidder.’

In its appeal to the Public Procurement Administration Review Board (PPARB), China Gezhouba argues that the water harvesting authority did not pick the lowest bidder for the Nyando dam works, causing it to lose the job.

But the National Water Harvesting and Storage Authority has responded to the appeal arguing that China Gezhouba had failed to meet all the contract requirements and therefore did not make it to the final round of the tendering.

“The Act provides that the successful tender is one with the lowest evaluated price,... In this case the applicant was not the lowest evaluated tender and was therefore not denied his rightful advance to the technical and financial evaluation stages.”

The water harvesting authority says China Gezhouba had, among other things, submitted documents in Chinese whose translation to English language had not been certified. The firm also failed to commit to buy at least 40 per cent of the supplies used in construction of the dam from local firms, the water harvesting authority says adding that the petitioner also failed to demonstrate capacity through proof of ownership of earthmovers and other equipment for the job. China Gezhouba is also said to have failed to provide evidence of permanent residency in Kenya. The water harvesting authority says it is for these reasons that China Gezhoub’s bid was declared non-responsive and did not proceed to the technical and financial evaluation stage.

But China Gezhouba has refuted the claims insisting it had complied with all the requirements set out by the water authority in the tender documents. In its filings at the PPARB, the company wants the board to direct the water authority to evaluate the bids afresh, this time round taking into consideration the documents it had submitted.

“The reason provided by the procuring entity… are incorrect and misleading and were arrived at by misapprehending the tender documents submitted by the applicant,” China Gezhouba says in its filing at the PPARB.

China Gezhouba claims that award of the tender to China Jiangxi was contrary to provisions of the Procurement Act and the Constitution that require procuring entities to ensure cost-effectiveness.

“The award of the tender to the second respondent (China Jiangxi) did not meet the constitutional threshold of fairness, equity, transparency and competitiveness… neither was it in compliance with the principles set out in Section three of the Public Procurement and Asset Disposal Act,” the company says.

China Gezhouba is not new to Kenya’s construction market and has won multi-billion shilling tenders for construction of major works, including Thwake Dam in Makueni County as well as the Northern Collector Tunnel in Murang'a County.

Sharon Obonyo, the water authority's Chief Executive, in a replying affidavit filed with PPARB insists that China Gezhouba had failed to follow the guidelines that the authority had provided when it invited bids for construction of the dam.

Ms Obonyo says there are disparities between the documents that China Gezhouba submitted in its appeal to the PPARB and what it had submitted to the authority during the tendering. “The documents presented to PPARB are in some instances misleading and total forgeries as the same are different from the documents submitted in the bid document,” the authority says.

Ms Obonyo also says China Gezhouba had sent its commitment to source 40 per cent of supplies locally after the bids had been opened. She insists China Gezhouba had sent an email with the letter on April 9 at 5.40pm while the bids had been opened earlier in the day at 9.00am. She accused the firm of tampering with the emails filed with the procurement review board as evidence to show that it had sent the email earlier. “I have noted with extreme concern that the applicant’s email screengrab… has been tampered with and is a pure forgery,” Ms Obonyo says in her affidavit.

“Specifically, a keen examination of the applicant’s exhibit… shows that the same has been tampered with to mislead the board to perceive as if the email was sent on Friday April 9, 2021 at 7.40am instead of… 17.40 hours by inculcating into the email screen grab a clear alteration or deletion of the number 1 and addition of the suffix AM.” She added that because of failure to submit all the requirements, China Gezhouba was dismissed as a non-responsive bidder and hence its bid was not considered. “From the foregoing, the applicant did not meet the preliminary responsiveness and mandatory requirements… the applicant’s bid could therefore not proceed for technical evaluation,” says Ms Obonyo.

Other firms that bid for the job were SBI International Holdings at Sh26 billion and Just Nice Construction at Sh22 billion.

The Soin-Koru dam, which has been in the works for years, is supposed to be put up along the River Nyando in Kisumu County to contain perennial flooding as well as improve water access for residents. It is also expected to expand rice farming in Kano Plains.

In the tender documents, the authority said it was working with a budget of Sh23 billion, including taxes, to build the government-financed dam. “The Soin-Koru Dam is a multi-purpose project that will reduce the perennial flooding on the lower reaches of River Nyando. It will also supply water for domestic, irrigation and hydropower generation,” it said. The dam with a water storage capacity of 93.7 million cubic metres will provide 72,000 cubic metres of water per day for domestic and institutional use.

The water authority had started the tender process last year but was forced back to the drawing board after all the bidders failed to meet minimum set standards. It restarted the process earlier this year that culminated in the award of the tender on April 15.

Parts of Kisumu, Kericho and Nandi counties are expected to benefit from the water supplied by the dam which will be located at the border of Kisumu and Kericho counties. “Flooding is a frequent phenomenon in the lower reaches of the Nyando River Basin and poses problems to the communities especially in the lower zones of the river basin,” said the authority in the environmental and social impact assessment (ESIA) lodged with the National Environment Management Authority. A 2009 report by the Ministry of Water quantified the impact of floods on the lower reaches of River Nyando, noting that it displaced 5,000 people annually and left them with losses of about Sh49 million due to damage to property.

Kisumu County Government recently said it requires about Sh400 million to repair roads destroyed by flooding following recent rains. The Nyando flooding also interfered with the seasonal patterns of agriculture, threatening livelihoods and food security in the area, according to the water authority. The flood water also destroys infrastructure as well as a general disruption of socio-economic activities, with the residents required to evacuate from their homes whenever there are heavy rains.

“Apart from constant flooding, the lower reaches of the Nyando River are also plagued by prolonged drought spells resulting in scarcity of water for irrigation,” said the authority in the ESIA. “During the period, the Nyando River flow is low and a number of irrigation schemes in the area cannot operate at full capacity, especially in lowers areas of Kano Plain where there are rice paddies.” It added that water from the dam had potential to increase the area under irrigation from 1,800 hectares to 5,170 hectares in and around Ahero and West Kano Irrigation schemes.  

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