Sunday, Dec 21st 2014

GOVERNMENT LOSES BILLIONS IN BVR DEAL

Saturday, November 3, 2012 - 00:00 -- BY WALTER MENYA AND DOMINIC WABALA
BVR Kits
A man walk past some of the 8,000 Biometric Voter registration kits at the Kenya Airways Cargo unit at JKIA yest. Photo/ Jack Owuor

The Biometric Voter Registration kits purchase agreement was lopsided and this could cost the country huge sums of money lost. The Kenya government will pay nearly double the purchase price for the kits in the agreement with its Canadian counterpart.

According to the contract, the price quoted by the Canadian Commercial Corporation for the 15,000 BVR kits was Sh6.1 billion (€56.21 million) payable in four instalments of 40 per cent as downpayment, 45 per cent at delivery, five per cent and the final bit of 10 per cent upon satisfactory voter registration.

However, the Kenya government has paid Sh2.4 billion or 40 per cent as downpayment and taken a loan of Sh7.2 billion from Standard Chartered Bank, bringing the price to Sh9.6 billion (€88.52 million).

The price seems to have jumped as a result of the obligations the government agreed to undertake. The purchase price quoted in the agreement excluded the Value Added Tax, withholding taxes, duties, customs charges or “other charges which may be claimed, collected or retained in Kenya, by any central or local authority or any official.”

Furthermore, the government will be required to foot further bills that may arise in case the voter registration is extended beyond 30 days. “The price specified above is valid for the time schedule set forth … and in particular for an enrolment period of 30 days as set forth therein,” Article 4.5 of the agreement states.

In the event that the registration period is delayed or extended, the agreement states the government and CCC will enter fresh negotiations. “The purchaser (government of Kenya) agrees that it shall pay CCC any additional weeks of operations support and maintenance at the prices agreed during such negotiations,” states Article 4.5 of the purchase agreement, a copy of which the Star has obtained.

The agreement places most of the obligations on the government and IEBC which CCC could use to terminate the deal. For instance, the IEBC has the obligation to clear the consignment at the airport. The clearance, Article 6 says, must be done within 24 hours upon arrival.

The CCC’s obligation is only tied to transport of the consignment to IEBC’s warehouse and guaranteeing the intellectual property rights patent and copyright of both the hardware and software.

The agreement was signed by CCC’s director for Business Development and Sales Donald Olsen, Treasury PS Joseph Kinyua and IEBC secretary James Oswago.

Neither the Treasury nor the Independent Electoral and Boundaries Commission have comment on the huge variation in price which has drawn criticism from lobby groups.

Ndung’u Wainaina, the executive director of the International Center for Policy and Conflict, protested. “Initially it was the unheard figure of Sh3.9 billion for the exercise. It is now costing taxpayers a whopping Sh9.6 billion, some of the money being a commercial bank loan. This is massive rip off! And even with this outright theft, viability of credible, secure and democratic elections is not there yet,” said Ndung'u.

The Law Society of Kenya chairman Eric Mutua has expressed concern over how the cost of the BVR kits rose to eclipse the highest bidder in the initial tender that was cancelled.

The government signed a loan facility of Sh7.2 billion with Standard Chartered Bank to pay for the kits from French company Morpho. The kits began arriving on Thursday with some more expected this Sunday.

The IEB on Thursday received 8,200 BVR kits from the French manufacturer. The kits arrived aboard an Ethiopian Airlines cargo flight ending the anxiety over a possible return to manual voter registration and the election date being pushed back to August.