Investor warns of Sh10b loss in JKIA deal

By STANDARD REPORTER

Kenya: A company that participated in a tender to man duty free shops at Jomo Kenyatta International Airport has termed the process flawed and warned Kenyans will lose billions of shillings in the process.

The President of Unifree Duty Free Cuneyt Cilingiroglu said it was unbelievable that the tender was be awarded to a company that would remit Sh200 million annually to the Kenya Airports Authority (KAA) when his company had quoted to remit at least Sh550 million a year.

He spoke yesterday in Nairobi when it emerged that senior Transport ministry and KAA officials awarded the tender to a firm that has proposed to offer lower concession fees. The fee is the amount of money the company remits to the government from proceeds of sales in a financial year.

Mr Cilingiroglu added that since the concession runs for 25 years, Kenyans stand to lose at least Sh10 billion considering that the number of passengers going through the airport is expected to go up.

“We are asking for relevant Government agencies to correct the mistake. We believe that we offered the best value for Kenyans. The decision taken by KAA is baffling.”

KAA last Friday shortlisted five firms expected to battle it out to be the duty free retail master concessionaire at the new Unit 4 upon completion next year.

A source familiar with the matter said there was a plan to award the duty free retail master concessionaire contract to a company that has proposed a concession fee of 12 per cent.  This is well below the global standard of over 20 per cent. Cilingiroglu added that it was unheard of in international airports for a duty free concessionaire to remit 12 per cent of its revenues like the winning bidder would, saying that the minimum figure is usually 20 per cent.

 “We chose to quote a generous figure because we want to establish a long-term relationship with Kenyans in a mutually beneficial way. We are very surprised by the decision,” he said.

Unifree has said that if its plea is not heard, it would raise a petition with the Public Procurement Oversight Authority to get redress, insisting that it fulfilled all requirement set out in the tender parameters.

According to a KAA letter, Unifree was declared unsuccessful since it “did not demonstrate relevant experience in operating as a master concessionaire in airports with over seven million passengers.

“We were told that we should have managed three airports, each having seven million passengers. But the tender documents were clear that the three airports should have a total of seven million,”  said  Cilingiroglu.