Industry News

Why Kenyans Missed Out on Sh300bn Roads Tender

Local firms did not meet the financial threshold set by the government.

Updated on

October 16, 2014

Malindi-bagamoyo road construction — Under this programme, 2,000km of small roads will be built this fiscal year. PHOTO | FILE

Chinese contractors dominate the short list of firms lining up for tenders in the first phase of the 10,000km roads project that was launched by the Kenyan government in July.

About 10 Chinese firms — among them China Wu Yi which has previously undertaken major infrastructure projects, including the construction of Thika Road — have been pre-qualified for the project that will be financed through the State’s annuity financing programme.

These firms will compete for tenders with other well-established European and Kenyan companies such as SS Mehta and Sons Ltd., Put Sarajevo General Engineering Co., H. Young Ltd., Hayer Bishan Singh, and SBI International Holdings.

The high number of pre-qualified Chinese firms has angered local contractors who now accuse the government of discriminating against them.

The list of contractors crying foul includes seven local consortia comprising 26 road construction firms that had expressed interest in the pre-qualification through a savings and credit society — Master Builders Sacco — to help mobilise resources.

Their application was rejected because it “did not meet the requirements for pre-qualification”.

In a letter dated October 7, the Transport and Infrastructure Ministry said the consortia did not meet the financial threshold set by the government.

“The consortia failed to demonstrate participation by any consortium member in any contract with a value of Ksh500 million over the past five years,” the letter said.

It added that the companies did not have an average cash flow of Sh400 million in the past five years and a turnover of Ksh1 billion as required.

Kenya Federation of Master Builders (KFMB), the umbrella body of local road construction firms, says the financial threshold was put in place to specifically disqualify local contractors.

“We had gone round it by getting a letter from a leading local bank indicating it would finance the works if we won the tenders,” said KFMB secretary-general Thiaka Muchai.

KFMB says it will lobby top government officials to be allowed to construct some of the roads. The lobbying will include asking Parliament to stop the award of contracts.