Dispute threatens to derail Sh5b pipeline job

Dispute over how Sh600 million paid to one partner in a consortium that has been contracted to expand Kenya Pipeline Company’s (KPC) fuel terminal in Nairobi, is threatening to derail work in the Sh5 billion project.

The project, scheduled for completion in early 2017, could fall behind schedule after disagreement erupted between India’s Prashanth Project Ltd and their local partners, Nyoro Constructors. The local firm claims that its partner in the project, Prashanth, received the Sh600million payment behind its back.

The consortium led by the Indian firm had started work on Kenya Pipeline’s fuel terminal in Nairobi, which is expected to hold extra petroleum products when a new pipeline from Mombasa becomes operational next year.

Both KPC and the Indian firm now want Nyoro to appear before High court judge, Justice Francis Gikonyo to explain how it obtained some confidential documents in the case.

KPC’ s chief legal officer Gloria Khafafa yesterday told the commercial court sitting in Milimani that some of the documents used by Nyoro Constructors to support the case it filed in court were obtained illegally, while others were not in the tender documents.

The legal officer was responding to questions about the authenticity of some of the documents and testament by an official from the local firm, Josiah Njoroge.

She said that some documents, including a Memorandum of Understanding between Prashanth and Nyoro Constructors were not supplied in the initial tender documents, while others adduced before the court to support Nyoro’s case were confidential documents that should be in the custody of the national oil distributor.

“The documents relied on were not from KPC. From the tender document, no MOU was signed between Prashanth and Nyoro,” testified Khafafa.

Khafafa refuted claims that the local construction company had entered into the deal as an equal partner. She told the court that Nyoro was a sub-contractor that rode on the mercies of the main contractor in the bid.

“Our evaluation could not make a legal relationship between the two. There was no partnership between the two companies.”

She said Nyoro’s representatives never attended any meetings between the corporation and the Indian firm.

 Meetings

Khafafa told the court that contract documents specified that KPC would not arbitrate any wrangles between the winning parties.

“Nyoro had not appeared for any meeting. We were never sure of what happened. The tender agreement was signed in July 2014 and the request for substituting Nyoro was done in January 2015. There was no complaint tendered to KPC by the company during this time,” Khafafa told the court.

Nyoro had accused Prashanth of side-lining it after the consortium won the lucrative deal. It alleged in court that the Indian company had intentions of sidelining it against an MoU drafted before the two firms placed their bid as a consortium.

“The plaintiff (Nyoro) and the first defendant (Prashanth) entered into a local participant partnership agreement by way of MoU which was a precondition for foreign firms to qualify to bid for the tender. The actions are meant to lock out local participation, contrary to the provisions of the tender documents,” states Nyoro’s lawyer, Walubengo Waningilo in papers filed before the court.