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Vicious dog fights for multi-billion shilling contracts leave Beijing and Nairobi with a public relations crisis. It was hoped that Chinese domination of Kenya’s infrastructure landscape would produce an easy ride for bureaucrats handling the mega deals but that has not happened.
Kenya’s big-ticket infrastructure spending has sparked a bidding war among Chinese contractors that is slowing down execution of key projects in East Africa’s largest economy and soiling the hands of senior public officials.

The race for multi-billion-shilling contracts in the  water, railway, road, ports and real estate sectors has in recent months produced some of Kenya’s most vicious corporate battles that have shaken key government departments to the core.  

The tendering wars have been so intense that not even the fact that most of the Chinese companies are government-owned has helped.
It was hoped that Chinese domination of Kenya’s infrastructure landscape would produce an easy ride for bureaucrats handling the mega deals but that has not happened. Instead, vicious tendering wars have erupted among the Asian firms that are now threatening to implode.

The rivalry among Chinese firms has exposed the soft under belly of the Asian giant’s State-controlled capitalism that has left Beijing featuring prominently in a number of controversial big-ticket contracts in Kenya.

The list of contested projects includes the planned construction of the Sh447 billion standard gauge railway line between Mombasa and Nairobi, whose pricing critics say has been inflated by more than Sh100 billion.

China Roads and Bridges Corporation (CRBC) beat a field of competing Chinese rivals such as China Railways Construction Company whose proxies are believed to be behind the controversy surrounding the deal.

China’s Exim Bank — the force behind Beijing’s global expansion — has agreed to finance nearly half the project cost, offering an attractive window for a cash-strapped Kenya government.

The fact that CRBC did the feasibility study, designed the railway, determined its cost all by itself has handed critics the most lethal ammunition in the matter that is now subject to parliamentary investigation.

Opponents of the railway project have also accused the government of failing to properly assess the integrity of the Chinese contractor.

It has emerged that the World Bank has recently barred CRBC from participating in any works it is financing because of fraudulent activities in a road project in the Philippines.

CRBC, together with its designated successor China Communications Construction Company (CCCC) Limited, is barred from participating in World Bank-funded projects worldwide starting January 2009 until January 2017.

No World Bank funds from the National Roads Improvement and Management Project in the Philippines were disbursed to CRBC and five other contractors.

China has since amended its criminal law to make it an offence for Chinese companies and nationals to bribe foreign government officials.

The law applies to companies organised under Chinese law and includes Chinese companies operating overseas as well as foreign-owned enterprises based in China. Active enforcement of the new law would put China at par with countries like the UK which has fined its multinationals billions of shillings for overseas corruption through its Serious Fraud Office (SFO).

Two other Chinese multinationals are also locked in a battle for the Sh30 billion Mzima Springs II water pipeline project.

The rivalry has pitted Water ministry bureaucrats who are rooting for China Water Construction Consortium (CWCC) against China Machinery Engineering Company (CMEC), which emerged as the frontrunner for the deal.

CMEC was set to close the deal, having signed a commercial agreement with the ministry in January 2013 but the change of government in March saw it stall.

CMEC later discovered that the government had opened fresh negotiations with CWCC for the same project, sparking a bareknuckle war that ended in court.

Bureaucrats at the ministry in September wrote to solicitor-general Njee Muturi inviting him to comment on the fresh agreement with CWCC despite the existence of an earlier one with CMEC.

The multi-billion-shilling Hazina Trade Centre has also stoked a tendering war among Chinese firms.

The National Social Security Fund (NSSF) awarded the contract to build the 39-storey office block in Nairobi’s central business district to China Wu Yi. The tender was initially awarded to Cementers Ltd, a Kenyan real estate developer which had put in a bid of Sh6 billion.

The award to Cementers was revoked on grounds that China Wu Yi had emerged as the lowest bidder with a price of Sh5.9 billion but had been overlooked.

READ: Procurement board nullifies Sh6bn Hazina Towers tender

Jiangxi also won NSSF’s controversial Sh4.6 billion contract to build infrastructure works in Nairobi’s Tassia Estate.

Jiangxi was picked in a tendering process that attracted five Chinese multinationals, including China Railway, China Wu Yi and Nanchang Foreign Eng. Co.

A section of NSSF’s board of directors has termed the contract fraudulent, leading to its suspension last week.

China’s leading technology firms ZTE and Huawei are also fighting to win an Sh8.6 billion deal to supply the police service with communication devices.

ZTE had been awarded the contract but this was later cancelled after it was found to have doubled the project cost.It has also been alleged that that taxpayers would have lost an additional Sh1 billion in maintenance costs had ZTE won the tender.

The project was to be funded with a $100 million (Sh8.6 billion) concessionary loan from the Chinese making it exclusive project to Chinese firms.

Huawei Technologies Africa Limited and AVIC International Holding were eliminated at the technical evaluation stage, leaving ZTE as the only successful firm.