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Infrastructure Brief

News and opinion on public works procurement

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  • Kenya: MP’s Reject Bill Banning Foreign Firms From Public Tenders

    by Kevin Davids
    March 23, 2020

    March 23, 2020 By Kevin Davids

    A Kenyan parliamentary committee has slammed the brakes on a bill that sought to stop foreign firms from taking part in public tenders below Sh1 billion and jobs Kenyans can do.

    The National Assembly’s Finance and National Planning committee has rejected the bill sponsored by Mathira MP Rigathi Gachagua that proposed changes to the procurement law.

    Mr Gachagua wanted the limitation to promote local industries with the external firms only getting tenders if Kenyan firms lacked capacity.

    Kenya has become an attractive destination for foreign contractors in recent years, especially those from China who have bagged many road and construction jobs.

    He further wanted the amendment to prescribe a stiff penalty for people registering firms on behalf of non-Kenyans eyeing tenders within the threshold.

    “The committee observed that the Public Procurement and Asset Disposal (Amendment) Bill may present challenges in implementation as there may be limited local capacity to provide goods, works and services as envisioned by the sponsor of the bill,” said the committee chair and Ainamoi MP Joseph Limo in the report to the House dated March 11, 2020.

    In rejecting the proposals, the committee further argued some contracts below Sh1 billon may require specialised capacity that may not be locally available.

    “For instance, printing of ballot paper in a by-election would cost less than Sh1 billion, however, due to the sensitivity of printing the same locally, the contracts can only be executed by a foreign company so as to safeguard the integrity of the election,” said the committee.

    “The committee recommends that having considered the bill, clause by clause and based on its observations, proposes to the House that the bill be deleted in its entirety,” Mr Limo said.

    The committee further rejected proposals by Roads and Civil Engineering Contractors Association, Energy Sector Contractors Association and Michael Olunja who submitted amendments by way of memorandum.

    Energy Sector Contractors Association proposed that the Act be amended to ensure that all materials, goods and services to be used in any procurement which are available locally be sourced exclusively from suppliers in Kenya.

    Roads and Civil Engineering Contractors Association wanted any procurement of less than Sh3 billion in respect of any infrastructure project be tendered and awarded to a local firm.

    Filed Under: Africa, Kenya News, Tenders

  • Africa|
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  • Water
  • Angola, Namibia To Launch Tender For Baynes Dam Construction

    by Kevin Davids
    March 19, 2020

    March 19, 2020 By Kevin Davids

    The governments of Angola and Namibia have signed bilateral agreements for the construction of a cross border Baynes hydroelectric dam. Angolan Minister of Energy and Water H.E. João Baptista Borges made the announcement and said the agreement will enable the launch of a public tender for the selection of a construction firm for the project, in line with the proposed timeline.

    “If we stick to the schedule of the agreement, we can comply with the deadlines, because there is a great interest in this bi-national project,” said Minister João Baptista Borges.

    Construction of the Baynes hydroelectric dam falls within Angola’s Energy 2025 Vision, which centers on creating increased capacity and distribution capabilities, supported by new renewables and private sector investment in new power generation projects. The planned hydroelectric dam will be located on the Cunene River on the border between Angola and Namibia.

    Construction is scheduled to begin in 2021 and a completion date scheduled for 2025. It is estimated to cost US $1.2bn; feasibility studies for the project was already carried out. According to the agreement, of the 600 MW to be produced by the plant, 300 MW will be directed to Angola and Namibia, respectively.

    Namibia has enormous potential for solar energy production. The country is the driest on the African continent, with 300 days of sunshine per year. The country is aiming for 70% of its installed electricity capacity to come from renewable sources by 2030. Angola on the other hand has only 14MW of non-hydro clean energy generation capacity, all of it off-grid. The country renewable energy plan is targeting 800MW of capacity, including wind and biomass.

    Filed Under: Africa, Energy, Tenders, Water

  • Featured|
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  • Uganda News
  • Uganda Target $117 Million Loan For Oil Roads

    by Peter Orengo
    March 12, 2020

    March 12, 2020 By Peter Orengo

    The government of Uganda is seeking US $117m loan from China for construction of oil roads. Uganda Media Centre communications and media relations manager Denis Katungi, announced the report and said the Cabinet agreed to borrow the funds.

    “The Government will borrow the money from the Industrial and Commercial Bank of China to finance the construction of Masindi-Biiso, Kabaale-Kiziranfumbi and Hohwa-Nyairongo-Kyarusesa-Butoole roads,” said Denis Katungi.

    According to Mr. Denis, upgrading and constructing the national oil roads will facilitate the efficient development of the strategic national oil resources. It will also add to the network of road infrastructure required for movement of construction materials, workers and consumables from other parts of the country to the oil region.

    Uganda has a target of completing a large section of its “oil roads” across the region. The set target of 2021 is a year behind schedule, and officials are citing funding challenges.

    According to a 2016 Cabinet directive to the Uganda National Roads Authority (Unra), the 12 critical oil roads, about 700km in total, were supposed to be completed by 2020 to facilitate the production of oil in 2023.

    Last year, the government signed a contract with China Railway Seventh Group to design and construct a 97km road connecting Masindi-Biso, Kabaale-Kiziranfumbi and Hohwa-Nyairongo-Kyarushesha-Butoole.

    Minister of State for Planning David Bahati also presented to Parliament a loan request of US $456.37m from China Exim Bank to fund the upgrade and construction of national oil roads. 550km of the roads for which funding has already been secured will be completed by 2021.

    Filed Under: Featured, Project Updates, Tenders, Uganda News

  • Africa|
  • Featured|
  • Tanzania News|
  • Tenders|
  • Transportation
  • Tanzania Launch Tender For Railway Line To Rwanda

    by Peter Orengo
    March 12, 2020

    March 12, 2020 By Peter Orengo

    The government of Tanzania has announced plans to invite international tenders for the construction of a standard gauge railway (SGR) from Isaka dry port to neighbouring countries of Rwanda and the Democratic Republic of Congo (DRC). Hassan Abbasi, chief government spokesperson and permanent secretary for the Ministry of Information, Culture, Arts and Sports revealed the plans and said that the government is in its final touches of negotiations.

    “Tenders for the construction of the SGR project to Rwanda and DRC will be announced anytime from now, President John Magufuli had already given directives on construction of the Mwanza-Isaka SGR that will connect to the two neighbouring countries,” said Hassan Abbasi.

    The chief government spokesperson also confirmed that feasibility studies for the SGR linking Tanzania and Rwanda have already been undertaken, adding that the two countries were now looking for financiers of the project. The rail link project is part of a US $14.2bn plan to build around 2,500km of standard gauge rail lines in the country over the next five years.

    It is intended to reduce road congestion and decrease freight costs by 40%. Each freight train is expected to transport up to 10,000 tonnes, equivalent to 500 lorry-loads. It will also connect Tanzania to Burundi and Uganda, making it an important enabler of regional integration.

    Tanzania will become the third country in East Africa to start enjoying modern railway services after Kenya and Ethiopia. Kenya was the first country in the region to start the construction of an SGR line, completing over 500km between Mombasa and Nairobi, and also inaugurating its passenger services in June 2017.

    Filed Under: Africa, Featured, Tanzania News, Tenders, Transportation

  • Africa|
  • ICT|
  • Tanzania News|
  • Tenders
  • Tanzania’s Central Bank Targets Mobile Platforms For Retail Investors

    by Peter Orengo
    March 6, 2020

    March 6, 2020 By Peter Orengo

    Tanzania’s Central Bank is responding to the ICT era by targeting to introduce a mobile platform that will capture retail investors.

    The Bank of Tanzania (BoT) is planning to introduce a mobile platform that will enable retail investors to apply for and trade treasury bills and bonds.

    The central bank said the platform is expected within this year after working out a methodology with stakeholders.

    The plan centered on reaching mass participation for retail investors on bills and bonds but also reducing the low amount of tender to 100,000/- from the current 500,000/-.

    Bank of Tanzania’s Manager of Financial Markets, Lameck Kakula, said next month they expect to meet stakeholders including mobile network operators to map out a way forward.

    “We are working with FSDT [Financial Sector Deepening Trust) in introducing the platform….this will enable more players to buy government securities,” Mr Kakula said during five-day BoT’s media seminar.

    Currently, he said, they are working on stage requirement system of the mobile bidding platform for bonds before launching the initiative.

    “April [next month] we will meet with stakeholders to map out process requirements and document them.

    “We’ll be in a better picture after the April meeting…but we want to launch the platform this year,” Mr Kakula said.

    The plan could potentially take investing in treasuries to the mass market by eliminating the friction in the current market infrastructure.

    “The central bank aims at creating a simple platform where retail investors will tender directly without a third part using their mobile phones,” Mr Kakula said.

    Process requirements are documented expectations, targets and specifications for business/service processes.

    They may be collected from multiple groups of stakeholders such as business units, customers, internal customers, users and subject matter experts.

    Data from BoT showed that the number of individual investors increased from 2.0 per cent in Q2 of 2018 to 6.0 per cent in Q2 last year.

    Mr Kakula said in Kenya through the Central Bank of Kenya (CBK) introduced such services of using mobile phones mid last month.

    Under Kenya’s platform the new service will make it easier to process transactions of Ksh 140,000 (8.2m/-) and below.

    “The bank is pleased to inform you about the roll-out of the Treasury Mobile Direct (TMD) services, designed to facilitate investment in government securities using the mobile telephone,” CBK said in a notice to investors last month.

    Filed Under: Africa, ICT, Tanzania News, Tenders

  • Featured|
  • Kenya News|
  • Public Spaces|
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  • Kenya Eyes First Road Bond At $1.5 Billion

    by Peter Orengo
    March 4, 2020

    March 4, 2020 By Peter Orengo

    An ambitious road project will see Kenya issue a $1.5 Billion first bond for the sector to carter for infrastructure costs.

    It is expected that the bond will be issued by June and will benefit other sectors of the economy.

    Infrastructure Principal Secretary Paul Maringa announced that the government is getting ready to issue its first-ever road bond seeking KSh150 billion ($1.5 billion),

    Paul Maringa told the Parliament that the bond will be issued by June this year. Part of the resources will go to Kenya Roads Board (KRB) to settle pending bills covering the period up to June 30. The remaining will be used to fund road projects across the country, from July 1 to September 30, and a second bond will then be issued.

    According to the official, the road sector needs $6.4 billion to settle pending commitments. “It will take over 10 years to pay off the current outstanding commitments, assuming no new projects are brought on board,” he said.

    Filed Under: Featured, Kenya News, Public Spaces, Tenders

  • Opinion & Analysis|
  • Tanzania News|
  • Tenders|
  • Transportation
  • Let’s Stop Airport Corruption and Monopolies. Tell TAA to Hold an Open Tender for JNIA!

    by Michael Kirwa
    March 2, 2020

    March 2, 2020 By Michael Kirwa

    Guest opinion commentary by Thomas Musongole

    Like many readers, I was very surprised to recently read that one of the biggest service providers at the country’s largest airport is currently operating illegally without a contract. How is it possible that millions of dollars are being paid from the public treasury to an underperforming company with no agreement in place?

    It must just be force of habit for the Tanzania Airport Authority (TAA), which for years has thrown hundreds of millions of dollars at Swissport Tanzania, who by all accounts are the ones responsible for the terrible service, delayed flights, lost and damaged bags, and mistreatment of local employees.

    How did we arrive to this point? Swissport Tanzania has held one of two contracts for ground handling services at Julius Nyerere International Airport (JNIA) since 2001. Previously, their monopolistic position was simply renewed again and again without any public tender.

    That may be about to change however thanks to great government oversight efforts. Last fall, the Tanzania Airport Authority (TAA) announced its first-ever open tender process in November for the new contract – meaning that Swissport is going to have to provide a competitive and transparent offer instead of just taking the business.

    On one hand, this is good news – greater transparency helps build public confidence in the TAA’s handling of projects that are critical to Tanzania’s economy, particularly the crucial tourism sector.

    On the other, the announcement raises an alarming question: if this is the first open tender offered, what happened over the past 19 years? How has the TAA assessed their options when past contracts have expired before now?

    Reports that the TAA renewed contracts to work with providers without public scrutiny or input casts doubt on their commitment to accountability and transparency. Promising an open tender is an important first step, but a promise cannot truly mean anything until it is fulfilled.

    Tanzanians have good reason to be concerned. Swissport Tanzania’s track record as a partner is less than stellar – increased labor costs, hidden fees, poor working conditions and the lack of a clear accountability structure has allowed Swissport to control what is effectively a monopoly position.

    This behavior is not uncommon. As part of an effort to crack down on these abuses of public trust, President John Magufuli recently announced probes into several construction contracts at the airport that may have been overpriced. Across Africa, ground handling provider contracts often progress without public input, leading to delays and unexplained increases in costs.

    We cannot afford to risk the future of the nation’s largest and busiest airport on a subpar provider. JNIA is an essential infrastructure asset that is critical to competing with Kenya’s Jomo Kenyatta International Airport as the gateway to East Africa for international travel.

    More than 21 airlines operate through JNIA, including elite global carriers such as KLM, Qatar Airways, Emirates, Swiss International and Turkish Airways, among others. According to the TAA, aircraft movements increased by almost 50 percent from 2016 to 2017. Planned construction will boost capacity from 2 million to 9 million annual passengers.

    In addition to the influx of international travelers, growing cargo traffic at JNAI is hugely impactful on the flow of imports and exports, which, in turn, affects Tanzania’s commerce and economy as well as regional and global supply chains.

    As these critical areas of the nation’s economy grow, Tanzania’s needs and the needs of JMIA are changing. In addition to maintaining the highest quality of service, the TAA must be able to demonstrate a high standard of transparency, especially as President Magufuli works to show the world that Tanzania is capable of tackling corruption.

    Unfortunately, Swissport Tanzania has been allowed to exercise undue control over its relationship with the TAA in the past. They have gotten used to a cozy monopoly without answering to the public about their pricing, their operating practices or the quality of their services.
    The open tender process is a sign that the TAA understands that the status quo needs to change. However, details of the process have yet to be revealed. Further, rumors have circulated about adding a third provider, despite the failure of this experiment in Lagos.

    In this area, we should look to examples of successful airport hubs across the continent such as Johannesburg, Cairo, Addis Abada, and Morroco for best practices. These hubs avoid bidding wars by relying on two providers and keep costs in check using transparent public tender processes.

    The TAA is at a crossroads. They have taken the first step, and now, the public must ensure the TAA keeps the promises it has made and demand a fully transparent process.

    Filed Under: Opinion & Analysis, Tanzania News, Tenders, Transportation

  • Tanzania News|
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  • Transportation
  • Railway-Line To Connect Rwanda & DRC To Tanzania In Advanced Stage; Authorities To Open Tender

    by Peter Orengo
    March 2, 2020

    March 2, 2020 By Peter Orengo

    An ambitious railway line transportation project that will connect Tanzania to Rwanda and the Democratic Republic of Congo is set for construction.

    Authorities are finalizing modalities to commence the construction project.

    The government of Tanzania said on Sunday it was in final touches of inviting international tenders for the construction of a standard railway gauge from Isaka dry port to neighboring countries of Rwanda and the Democratic Republic of Congo (DRC).

    “Tenders for the construction of the SGR project to Rwanda and DRC will be announced anytime from now,” said Hassan Abbasi, chief government spokesperson and permanent secretary for the Ministry of Information, Culture, Arts and Sports.

    He told a news conference in the capital Dodoma that President John Magufuli had already given directives on the construction of the Mwanza-Isaka SGR that will connect to the two neighboring countries.

    Abbasi said construction of the SGR from the commercial capital Dar es Salaam to Morogoro covering about 200 kilometers has reached 75 percent, adding that construction of the SGR from Morogoro to Makutopora in Dodoma has reached 28 percent.

    “Tanzanians will this year begin enjoying travelling in electric trains plying on SGR,” said Abbasi, adding that the government has until now spent about 2.957 trillion Tanzanian shillings (about 1.3 billion U.S. dollars) on the construction of the SGR.

    He said permanent secretaries from the east African nation’s ministries will next week spend two days inspecting progress made on the construction of the SGR.

    In November 2019, President Magufuli said the governments of Tanzania and Rwanda were in final touches of negotiations to construct a SGR from the Isaka dry port in Tanzania to Rwanda.

    He said feasibility studies for the SGR linking Tanzania and Rwanda have already been undertaken, adding that the two countries were now looking for financiers of the project.

    Trade and Development Bank, a trade and development financial institution in Africa, said in November 2019 it had approved a one-billion-U.S.-dollar soft loan to Tanzania for implementation of infrastructure projects, including the construction of the SGR.

    Filed Under: Tanzania News, Tenders, Transportation

  • Energy|
  • Featured|
  • Kenya News|
  • Tenders
  • Kenya Eyes Electricity Deal In 8 African Countries

    by Peter Orengo
    March 2, 2020

    March 2, 2020 By Peter Orengo

    The main electricity generating company in Kenya, KenGen, has spread its strength going into eight other countries where it stands to scoop some impressive deals.

    After Ethiopia where KenGen, the state-owned Kenya Electricity Generating Company, won a contract for geothermal infrastructure tenders, another eight targets are lined up.

    Officials have said KenGen is eyeing geothermal deals in Uganda, Tanzania, Djibouti, Rwanda, South Sudan, The Sudan, Zambia and Comoros to boost revenues.

    The African states, which share Kenya’s favourable and geothermal rich Rift Valley geology, are playing catch up in their efforts to exploit the renewable and cheap geothermal energy.

    Heads of government and top officials from the eight African countries have already been hosted at KenGen’s plants in Naivasha or are set to visit as talks continue on the deals.

    “We have ready capacity to help these countries exploit their geothermal resources. We are already doing this for Ethiopia and we are in talks with these countries on how to collaborate with them,” said Cyrus Karingithi, the assistant manager, resource development and infrastructure at the KenGen in an interview with Business Daily.

    Last October, KenGen said it has reached an agreement with an independent power producer (IPP), Tulu Moye Geothermal Operations located in the eastern region of Ethiopia, to drill wells and offer geo-scientific survey.

    Under the deal, KenGen which sunk its first exploratory well in 1956, will provide geo-scientific survey and drilling eight geothermal wells. A geothermal well costs about Sh650 million.

    The Ugandan minister for Energy Mary Kitutu is expected to visit KenGen’s Olkaria plants for further talks.

    Filed Under: Energy, Featured, Kenya News, Tenders

  • Energy|
  • Kenya News|
  • Tenders
  • Kenya Power Challenges Tender Cancellation

    by Kevin Davids
    February 24, 2020

    February 24, 2020 By Kevin Davids

    Electricity distributor Kenya Power has launched a court case to challenge the cancellation of a tender, arguing that the case should be ruled under European law.

    The Daily Nation reported that, in a case filed before the High Court, Kenya Power said that claims by local contractors that they were discriminated against in favour of foreign companies were unsubstantiated.

    Further, the national electricity distributor said the tender was subject to an agreement with the European Investment Bank for the project, known as Last Mile connectivity.

    Kenya Power argued that the contract is subject to English law and can only be settled through the court of justice of the European Union.

    It is reported that the tender was cancelled by the Public Procurement Administrative Review Board (PPARB) in early February after a group of local contractors under the Energy Sector Contractors Association challenged the procurement process.

    The PPARB, comprising of chairperson Faith Waigwa and members Joseph Gitari, Nicholas Mruttu and Rahab Chacha, cancelled the process, stating that the electricity distributor abused the local preference clauses in procurement laws.

    The board said Kenya Power ought to have “unbundled” or divided the tenders into smaller lots to allow the participation of local contractors.

    “The procurement entity’s bidding document for procurement of design, supply, installation, commissioning of transmission lines and substations issued on 20 August 2019 be and is hereby nullified and set aside,” ruled the board.

    However, Kenya Power said the board acted in excess of its jurisdiction in dealing with the matter.

    “The respondent (board) assumed jurisdiction to hear and determine the dispute and thereby acted illegally,” the documents stated.

    The power utility said the purpose of the contract is to attain universal access to electricity for the Kenyan population by 2030, under which it targets to connect about 300,000 new customers in 32 counties to the national grid.

    The board’s decision might lead to cancellation of the entire funding of the €60 million ($65 million), the electricity distributor stated.

    Filed Under: Energy, Kenya News, Tenders

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