[kictanet] [Fwd: [Fibre-for-africa] Kenya's fibre optic cable project queried]

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-------- Original Message --------
Subject: 	[Fibre-for-africa] Kenya's fibre optic cable project queried
Date: 	Mon, 12 Mar 2007 08:32:18 +0300
From: 	Wairagala Wakabi <wakabi at cipesa.org>
Reply-To: 	APC - Private list for use by EASSY Workshop Participants 
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So Kenya is pushing full throttle with its vision of building a cable to 
link the country to international fibre. The East African Marine System 
(TEAMS), promoted by government and expected to draw private financing 
as well, has been touted as the country’s answer to EASSy’s delays in 
getting off the ground – and in satisfying Kenya’s misgivings about the 
EASSy protocol, the role NEPAD has been playing in the initiative and – 
some say – South Africa’s attempt to dominate the show.

But in the rush to get TEAMS off the ground, did the country ignore best 
practice in procurement? That is the question an article in today’s The 
EastAfrican newspaper asks. That is the question the country’s Attorney 
General’s Chambers has been asking.

Their queries refer to the manner in which Tyco International Ltd. Was 
handed the $2.7 m deal to do prelim work on the deal “without 
competitive bidding”.  One could join the AG’s office in asking 
questions: Will TEAMS go ahead with this plan anyway, now that some of 
the entities being expected to fund the construction of TEAMS have moved 
a step further with EASSy. Here we are referring to the likes of Telekom 
Kenya. And if EASSy goes ahead, then  Flag Telcom/ Reliance Telecom 
actualise their advanced plan to build their cable (of which Kenya Data 
Network is a keenly involved party, just as it is in EASSy) how viable 
will these cables be? For more on cables planned on East coast of 
Africa, please see www.fibreforafrica.net .

Wakabi
--

Fresh snarl-ups in Kenya-Fujaira fibre optic cable project

STAFF WRITER, The EastaAfrican, March 12, 2007

Controversy is simmering between the Office of the Attorney General and 
the Ministry of Information and Communications over the procurement for 
a multimillion-dollar plan by Kenya to build a fibre-optic cable link 
from Mombasa to Fujaira in the United Arab Emirates.

Known as The East African Marine System (TEAMS), the project is expected 
to be launched in parallel with the $200 million East African Submarine 
Cable System (EASSy) — a fibre-optic cable link along the eastern 
seaboard of Africa, from South Africa to Sudan via a number of landing 
points including Mombasa.

The EastAfrican has learnt that the Office of the Attorney General has 
raised queries over the manner in which Tyco International Ltd — a 
transnational that operates in 100 countries — was in January this year 
awarded a $2.7 million contract by the Information Ministry to conduct a 
marine survey without competitive bidding.

The ministry had in January sought and was granted an exemption from the 
Directorate of Public Procurement to procure the contract for a marine 
survey through single-sourcing.

However, the Office of the Attorney General has — in a letter signed by 
Solicitor-General Wanjuki Muchemi — argued that the application to the 
directorate was not done according to procedure and demanded minutes of 
the ministry’s technical evaluation committee that decided that the 
project be single-sourced.

Apparently, the ministry had sought the exemption on the grounds of the 
onset of the monsoon season in the Indian Ocean and the consequent need 
to fast-track the project.

It is understood that, during an earlier meeting in Dubai between Kenya 
government officials and the Dubai-based Etisalat Ltd — the main private 
sector sponsors of the project — the point was made to the officials 
that the marine survey contract and the cable construction contract 
could not be awarded to separate companies.

The government had been warned that it was rare for a cable contractor 
to accept a marine survey conducted by another firm.

Experts had also told the government officials that marine surveys are 
usually deemed to be part and parcel of construction works and that 
awarding the survey component separately would amount to giving the 
construction contract to the same firm.

The Office of the Attorney General wants to know why the issues raised 
by experts had been ignored.

TEAMS is one of the largest projects being undertaken by the government 
this year. The government decided to launch the project when it realised 
that the EASSy project was facing too many delays.

The government is set to invite bids any time from now for a financial 
arranger who will design a plan to raise money for the project, 
tentatively expected to be completed by early next year.
The contract will be awarded competitively by April this year.

The government — through Telkom Kenya — is working with Dubai-based 
Etilasat to build the cable.

The private sector will be invited to either buy shares in the project 
or will be brought in on the basis of proved capacity to raise funds 
through models worked out by the financial arranger.

The information and communications technology sector in Kenya has for 
years been held back by reliance on expensive satellite connectivity to 
the international network.

Interest in construction of fibre-optic cable links to the Kenya Coast 
has risen dramatically and Kenya appears set to acquire cheaper 
international connectivity in less than two years.

First is the planned $200 million EASSy, which is beginning to pick up 
momentum after a prolonged three-year gestation period.

Currently, the proposal is for an open-access operation modelled to 
allow new entrants to use the infrastructure without paying high entry 
charges.
This is expected to result in low costs for connectivity and exponential 
growth in transmission.
According to the financing plan, up to 85 per cent ($170 million) of the 
funding is to come from development finance institutions, including the 
International Finance Corporation.

The EASSy Construction and Maintenance Agreement — an important project 
implementation landmark — was signed in Nairobi last month by 24 
licensee parties of the EASSy consortium from 17 countries. It is the 
trigger that now makes the project fully funded and committed from an 
equity point of view.

Reliance Group of India has also joined the fray. The giant company has 
announced plans for a third cable option along the East African coast 
that will link South Africa and Kenya and also serve Tanzania, 
Mauritius, Mozambique and Madagascar as well as some landlocked countries.

The cable link will be laid down by Flag Telecom, a subsidiary of 
Reliance.

Seith East Africa Ltd of the United States is also understood to have 
approached the government of Kenya to allow it to build a control centre 
around the Athi River area to serve a new cable link it is planning to 
build joining ports on the East African coast to the Arab world.
The company is part of the Blackstone Group, one of the largest private 
equity companies in the world.



==============
Wairagala Wakabi
Research Associate
CIPESA
Plot 22 Bukoto Street, Kamwokya
P.O Box 26970 Kampala, Uganda
Tel. +256 41 531899
Cell: +256 772 406 241
Email: wakabi at cipesa.org
www.cipesa.org

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