Top Water bosses trade barbs over Sh36b dam tender

Water CS Eugene Wamalwa (left) and PS Patrick Nduati

President Uhuru Kenyatta could be forced to step in to end a vicious war between top officials of Water and Irrigation ministry.

The row threatens to derail the scheduled ground-breaking of a multi-billion dam project in Makueni and Kitui counties.

Documents seen by The Standard on Sunday reveal irreconcilable differences between Cabinet Secretary Eugene Wamalwa and his Principal Secretary Patrick Nduati.

The paper trail shows procurement irregularities, insubordination, and total disregard of Attorney General Githu Muigai’s legal opinion on a key government project financed by the African Development Bank (AfDB).

The CS and the PS have exchanged snappy memos, and similar exchanges between Nduati and AfDB may have put the future of the Thwake Dam project in jeopardy with the bank now threatening to withdraw funding.

While Wamalwa, the AfDB and Githu have strongly advised that the tender be awarded to the lowest evaluated bidder, at Sh36 billion, as recommended by the ministerial evaluation committee, but PS Nduati in his letter to the bank has insisted the tender will be awarded to another firm at Sh39 billion — Sh3 billion higher.

In the shadows are a city billionaire with massive interest in one of Kenya’s biggest motor vehicle dealerships and a top investor at the Nairobi Securities Exchange (NSE). Sources within the ministry and National Assembly’s Committee on Agriculture say the billionaire is the powerhouse behind the row, offering millions of dollars to invalidate the evaluation committee’s report on the tender.

Wamalwa has told The Standard on Sunday he will not allow the taxpayer to incur unjustifiable costs “just to soothe people’s egos and their corrupt tendencies.”

“I told the House committee and I am telling you now that I will never allow the taxpayer to be exploited by anybody at the ministry as long as I am in charge. Over my dead body! The ground-breaking ceremony by the President is scheduled for April.

“The project financier, ministerial evaluation committee and the Attorney General have given sufficient advice on how we should proceed. Should other people decide to behave otherwise, they should know they will be held personally liable,” Wamalwa said.

Opened bids

The fights over the tender began on June 30 last year when the ministerial evaluation committee opened bids for 25 firms that had responded to an advertisement for civil and other associated works at Thakwe Dam.

The firms that responded include China Gezhouba, Sinohydro Tianjin Engineering, Essar Construction and Industry Co Inc, Strabag International GmbH and CMC Yuksel JV.

Shortly after, the evaluation team wired its report saying: “The evaluation committee recommends that bidder No1: M/S China Gezhouba Group Company ...being the lowest evaluated bidder be invited for negotiation and considered for award of contract for civil works for construction of Thwake Dam Embankment and associated works.”

AfDB, being the financier, was notified of this outcome by the ministry. In return, the bank granted a ‘no-objection’ letter, meaning that the ministry was in compliance with the bank regulations and would proceed to award and sign the contract with the winning bidder.

The PS then appointed a Ministerial Tender Committee chaired by Nicholas Kitua with Christine Kawira, Wilfred Onchoke, Augustin Ndwiga, Tom Ndhiwe, James Yatich and George Marete as members.

This committee approved the recommendation of the evaluation committee but awarded the tender to a different firm from the one recommended by the evaluation committee.

The Ministerial Tender Committee (MTC), in making the recommendations, said the first bidder, China Gezhouba Group Limited used the experience of one of the companies of Gezhouba Group No 1 Engineering Co Ltd that it claims was blacklisted (cross-debarred).

As a consequence, MTC recommended that the tender be awarded to the next bidder in ranking, STECOL (Sinohydro Tianjin Engineering Co LTD) despite being Sh3 billion higher than the original winner. It was at this point that trouble started. Upon receipt of notification of the outcome of MTC’s recommendations, AfDB sent an advisory to the ministry. The bank, in its letter dated February 24, 2017, told the ministry that the reasons given by the MTC for invalidating the bid by China Ghezouba Group Company were without merit. AfDB further told PS Nduati that the MTC recommendations were diversionary in nature and lacked merit.

“With regards to the experience of M/S China Gezhouba Group Company Limited and the use of experience of cross-debarred subsidiaries, the bank has stated in its letter that this was adequately addressed during the pre-qualification process and cannot be raised again at this evaluation stage.

“The bank deems its earlier response on this issue adequate and binding. Furthermore, the said subsidiary was cross-debarred for a limited period of 18 months which period expired in October 2016, well before the deadline for submission of bids on December 21, 2016...this particular bidder or its subsidiaries do not appear in the bank’s list of debarred firms,” AfDB said.

The bank, in what appears to have been a conclusive decision, told the ministry to proceed and sign the contract with the lowest evaluated bidder, China Ghezouba Group Company.

Consequently, Wamalwa fired a memo to Nduati. The tone of Wamalwa’s memo gives the impression of a frustrated Cabinet Secretary whose instructions had either been ignored or disregarded by his accounting officer.

The memo, dated March 7, 2017, read: “In my internal memo dated February 17, 2017, I brought to your attention concerns raised by the National Treasury on the implementation of Thwake Dam Project funded by the African Development Bank. I have also received correspondences from the bank giving its opinion regarding the contractor to be considered for construction of Thwake Dam. “I also received the legal opinion of the Attorney General on the above matter. Thwake Dam is a Vision 2030 project, which the Presidency is keen to have implemented with a ground-breaking ceremony proposed for April 2017. Considering the above correspondences, I advise that you proceed and execute the contract for construction with the lowest evaluated bidder.”

Githu not only advised the ministry that the MTC had erred but also drew their attention to the consequences in the event the bank considers re-allocating its partial funding towards the project.

“We note the Ministerial Tender Committee approved the evaluation committees report on one hand and rejected it by awarding to Sinohydro Tijian Co Ltd. It is our considered opinion that the decision by the Ministerial Tender Committee to declare the lowest evaluated bidder non-responsive was substantive. In effect, the MTC rejected the submissions by the evaluation committee by purporting to make an approval.”

Tender evaluation

African Development Bank in its letter rejected the MTC report saying: “The bank does not agree with the reasons proffered for varying the recommendation of the tender evaluation committee to award to the lowest evaluated bidder.”

But in what paints a picture of rising temperatures in the ministry, PS Nduati told off project financier African Development Bank in his letter dated February 28, 2017.

Nduati not only accused the bank of having a preferred candidate but ignored the position of the bank as the financier of the dam and went on to say the contract would proceed as recommended by the MTC. “We have noted that you have given the no objection to your preferred candidate and not as per the Ministerial Tender Committee recommendation. Please be informed that the committee’s decision still holds, having been arrived at through GoK laws,” Nduati told AfDB. But AfDB would take none of this and on March 3, 2017,  in a letter signed by Gabriel Negatu, it told Nduati that AfDB had no preferred candidate and that in it’s no objection was granted based on the tender evaluation report which the bank had reviewed and found to be in compliance with its rules and regulations.

“The bank would like to reiterate further, that, in line with section 8.01 of the loan agreement signed between the Republic of Kenya and the Africa Development Fund dated January 27 2014, procurement of goods and works necessary for the execution of the project is undertaken in accordance with funds’ rules and procedures for procurement of goods and works which supersedes any national procurement laws in accordance with section 7 (1) of Public Procurement and Disposal Act,” AfDB said.