Story by JAINDI KISERO
TREASURY PS JOSEPH KINYUA has directed that the process of choosing the select group of private sector players to partner with the Government in the ownership of the multi-million shilling East African Sub Marine System Project (Teams Ltd) be handled by the Privatisation Commission under the chairmanship of a respected academic, Prof Peter Kimuyu.
Teams Ltd is an initiative of the Government and Etisalat of the United Arab Emirates, in which the parties have agreed to build the first undersea fibre optic cable between Mombasa and Fujaira in the Emirates.
Some 11 private sector players were recently selected to own shares in the company, under what the Government is presenting as a private-public partnership deal.
These circumstances have kicked up an intense war between the major telecommunications companies over the ownership of Teams Ltd, with companies left out of the lucrative deal claiming that the process of privatising the company had not been conducted transparently.
Literally, all the major telecommunications companies in this country are lobbying to get a piece of the action, counting on the fact that the value of the company will rise astronomically once the project goes into commercial operation next year.
There have been suspicions that well-connected operatives have lobbied to ensure their cronies get a share of the family silver on the cheap.
So, preponderant have been the claims and counterclaims surrounding the deal that the Kenya Anti-Corruption Commission officials last month jumped into the fray by launching investigations into the manner in which the privatisation process was handled.
KACC is also interrogating the circumstances under which market regulator, the Communications Commission of Kenya was made to issue a $60 million guarantee to enable the construction and laying of the cable to commence.
I gather that the Office of the Prime minister also recently summoned Ministry of Information and Communications officials to ask question about the privatisation of the project.
In my own view, Mr Kinyua deserves congratulations for directing that the responsibility of managing the privatisation of Teams Ltd be transferred to the Privatisation Commission.
The commission is better placed to investigate some of the allegations surrounding the deal because, as opposed to the institutions handling privatisation currently, this body is bound by law to apply stricter rules of transparency and disclosure when overseeing a privatisation projects.
Prof Kimuyu’s team should investigate and determine is the following. First, is there substance to the claim that the procurement of the 11 private sector players in Teams Ltd was done irregularly?
WERE ALL THE PLAYERS IN THE TELEcommunications industry given an equal chance, and on what basis were the companies selected?
Second, considering that the billions of shillings the Government has so far spent on the project, including the $60 million guarantee by the CCK which more or less covers the cost of completing the cable’s construction, wouldn’t public interest be served better if the sale of shares in the company to private sector players was delayed until the cable comes to commercial operations next year?
Third, what can be done to ensure that the Government reaps maximum shareholder value from the investment it has put into the project?
I say so because billions of shillings in public resources have had to be sunk into the project , including the millions that went into paying for the feasibility studies.
The marine survey alone was done at the cost of $2.7 million. The Government paid millions of shillings to Standard Chartered Bank, the financial arranger, and for the initial down-payment to the contractor.
In contrast, the 11 selected companies have so far only signed escrow agreements committing them to pay 5 per cent of the money they intend to put into the company.
According to the arrangement, the next stage will be for the companies to sign a shareholders’ agreement with the Government committing them to pay the full amount of the shares they have been allocated.
And, once they pay, the arrangement is that the Government will be relieved of its pro rata part of the financial obligations to the project.
The Ministry of Information and Communications say the project has been modelled as a unique public private partnership where the government is facilitating the private sector to enable them to provide cheap bandwidth to the fast-growing information and telecommunications sector.
The ministry insists that the 11 companies will bear the greater part of the financial burden of the construction.
Yet, whichever way one looks at it, this is a project that reached financial closure long before these companies committed a cent.
Right now, if some problem was to occur, it is the Government that would have to bear the risk.
Prof Kimuyu must make sure that another Mobitelea does not happen under his watch.
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