Tender Wars Threatens To Stall Sh59B Dongo Kundu Special Economic Zone Project

An ambitious project is at stake in the middle of two Japanese companies fighting over a lucrative tender to construct the proposed Sh59 billion Dongo Kundu Special Economic Zone at the Port of Mombasa.

At the heart of the dispute is a faction led by wheeler dealers linked to the Kenyatta regime who influenced the Kenya Ports Authority (KPA) tender committee to favour one company through some specifications made in the last days of Uhuru in power.

Two companies; Toyo Construction Ltd and Toa Construction Ltd emerged as the front runners in the tender which was announced in November last year. Under the terms of agreement, eligible bidders were supposed to be of Japanese nationality in the case of the prime contractor. Kenyan companies were also allowed to apply through a joint venture provided they had a Japanese contractor as the main bidder.

The tender was advertised on November 15 last year. However, intrigues surrounding the deal which have now put the whole project in jeopardy while damaging Kenya’s international reputation began four months before the tender was announced.

This was in June, just two months to the elections when Toyo Construction Limited was handing over Phase 11 of the second container terminal at the port of Mombasa to KPA. The terminal which added an additional 450,000 Twenty-Foot Equivalent Units (TEUs) to the Mombasa port had taken 44 months to be completed at a cost of Sh32 billion also funded by JICA.

It was during the same week that the government announced that JICA had agreed to give it additional funding of Sh39 billion which was supposed to be used for the construction of the Dongo Kundu SEZ project provided that a Japanese company got the tender.

Influential people in the Uhuru regime which was in its dying days but were sure that Azimio la Umoja was going to win decided to strike. Led by former Alego Usonga Mp Edwin Yinda, former Jubilee vice chair David Murathe and former Mombasa governor Ali Hassan Joho, they decided to back Toa Construction Limited to get the tender.

At that time, the KPA administration led by acting managing director, John Mwangemi decided to play along. They even changed the rules of the tender in December after contractors had already applied on December 7.

“Further to our submission to you, vide letter reference PDM/2/4/1 dated 31st August 2022, and your subsequent concurrence letter, vide Ref TC-22- 358™ dated 17th October 2022, and follow-up meetings that have been held in respect to the above subject, we seek your confirmation in amending the eligibility and qualifications subsection,” reads a letter dated December 7, 2022 from then KPA’s acting managing director, John Mwangemi, to JICA Kenya chief representative Iwama Hajime.

At the heart of the request was an extension of the time period for the tender from the current five to 10 years, to up to 15 years, a move observers say was meant to favour some contractors specifically Toa Construction Limited.

Dongo Kundu bypass.

The push by Mwangemi’s team which has already been hounded out of office by President William Ruto’s administration is now haunting KPA which is stuck between a rock and a hard place. Dongo Kundu is supposed to be open for investors by July 1 which is just two months away.

In November last year, Ruto promised that the entire Dongo Kundu project would be complete within 24 months.

“I give a commitment that within 24 months, the project that will provide opportunities for the coastal region, must be completed soon so that we can actualise the dreams of many people,” he said.

When complete, Dongo Kundu will comprise an export-processing zone, industrial parks, free trade zones and other auxiliary services such as tourism, meeting, conferencing and exhibitions. It will also have zoned residential areas for workers.

The zone, aimed at attracting a more significant share of foreign direct investment and exports, as well as jobs, is being developed under the Ministry of Industrialisation. The project at the Mombasa port doorstep is intended to enhance export volumes from Kenya, as part of its export promotion programmes.

The SEZ which is Ruto’s first major project has already received its first investor Taifa Gas, whose construction was launched in February by the President. It is now two months, and Taifa Gas which is owned by Tanzanian tycoon Rostam Aziz is unable to fully use its site due to lack of the required infrastructure.

The contractor is expected to dredge a special berth, clear the site, build facilities, including the administration building, and set up a security system and information and communication technology hub.

This entails the construction of a free trade zone, port, logistics hub and industrial zone where companies using Mombasa Port would be allocated space to set up depots. Dredging of the berth will include widening and reclaiming of land for the project.

The works entail the development of a port facility (multi-purpose berth) of 300 meters quay length, a trestle of 450m in length and minus 15-metre draft. It will also have a container and vehicle yard with a capacity of 1,830 Twenty-Foot Equivalent Units (containers) and 2,000 vehicular units. Also, in the plan are buildings and dredging of navigational channels.

Besides the civil and building works, there will also be a cargo handling equipment package that shall see the supply of mobile harbour cranes, forklifts, reach stackers, tractors and trailer chassis. The other components in the larger project include the construction of the 4.6km access road connecting the Port to the Mombasa southern bypass road.

However, despite all these lofty dreams of what the SEZ will do to the people of Mombasa and Kenya in general, irregularities on how the tendering process was handled by the former KPA management now risk derailing the whole project.

As it is, the project which is already five months late cannot start due to tender irregularities. JICA has twice rejected KPA’s decision to disqualify one bidder on account of “minor” oversights that are not crucial to the tender evaluation stage.

If KPA goes ahead and awards a winner in the current state, other competitors could lodge a complaint at the Public Procurement Regulatory Authority (PPRA). This will further derail the project which is critical for the success of the entire Dongo Kundu SEZ project.

For now, all eyes are on the new KPA administration to see whether they will correct the wrongs done by their predecessors.