Kenya Revenue Authority could lose Sh2billion in an excise stamp machine deal with Swiss Firm SICPA SA Security Solutions (SICPA).
This is after it emerged that KRA terminated the firm's contract yet the machines can only be used with the company’s solutions and expertise.
The firm has been supplying KRA with the Excisable Goods Management System (EGMS), including the printing of excise stamps, since 2013.
However, following the expiry of the firms contract KRA advertised an expression on interest yet it cannot use the machines with any other printer.
Appearing before the National Assembly Public Investments Committee on Commercial Affairs & Energy, the firms’s directors said that that effective July 1, if KRA opts for a new excise stamps printer the machines bought at over Sh2 billion can not be used.
This essentially means that if the Swiss firm fail to win the newly advertised tender by the taxman the equipment will be rendered obsolete and Kenyans will lose money.
KRA still owes the company 31 million euros (Sh4.8 billion) for excise stamps printing and supply.
SICPA Chief commercial officer Gianni Santoro told the committee that despite KRA having acquired the machines the system can only continue operating if the Swiss firm are the ones undertaking maintenance.
“The ownership of the equipment will be transferred to KRA. but even with the transfer the question is will any other supplier be able to use the equipment? The answer is no because they have a solution different from ours,” said Santoro.
Laikipia East MP Mwangi Kiunjuri questioned the suppliers motive knowing well they were the only ones who could run the technology.
The MP termed the move by SICPA as a ploy to hold KRA at ransom, unless the government gives the company leverage to continue supplies.
“Why did KRA not only buy the stamps directly from you if the machine you are going to sell to them can only be maintained by you, you have the security features why then buy the machine instead of buying the services?” paused Kiunjuri.
Kiunjuri accused the company of taking undue advantage.
"You are the ones holding the life machine you switch it off the patient is dead and now you are about to switch it off. This means the machine cannot be used by any other provider,” added Kiunjuri.
CISPA however maintained that the solution was a security one and not a commercial one that can be opened to every manufacturer.
“These are unique solutions [as] every company offering these services have different security keys, that’s why they cannot be open to everyone otherwise it won’t be a security solution,” added Santoro.
Aldai MP Marianne Kitany sought to know why the firm failed to print excise stamps for cosmetic products yet in was included in the contract.
CISPA said that the pending court cases and the lack of clear provisions for the cosmetics made it difficult at the time to implement the stamp on the products.