What you need to know:
- Minister defends awarding of bid to telcoms services provider
- Treasury Cabinet Secretary Henry Rotich told the National Security and Administration Committee the deal can be stopped if it is found to have been procured irregularly.
- Mr Rotich said the tax obligations of Safaricom company would remain while the dividends payable to the government as a shareholder wouldn’t be affected.
The security surveillance contract awarded to Safaricom will be audited before the government signs it, head of the Treasury says.
Treasury Cabinet Secretary Henry Rotich told the National Security and Administration Committee the deal can be stopped if it is found to have been procured irregularly.
Mr Rotich told the committee that like MPs, the Treasury also wants to ensure that the contract will be good value for money and will ask the Public Procurement Oversight Authority to audit before Safaricom builds the network.
THE LAW IS CLEAR
“The law is clear that once the Treasury is notified that this has been given to Safaricom, the oversight authority will be notified within 15 days. If there is a challenge, the Treasury wil be asked to stop the procurement,” said Mr Rotich Tuesday.
The committee has asked that the signing of the contract be put on hold until it is assured it is clean. Mr Rotich and Principal Secretary Kamau Thugge were the last government officers scheduled to meet the team.
“We don’t want to be seen to be promoting bureaucracy and procrastination,” said Mr Asman Kamama chairman of the committee.
Mr Rotich said award of the contract and notification are two different matters. Safaricom has been awarded the job and the government will negotiate with it and if satisfied, issue the official notification.
The oversight authority will then step in to review it.
He said from the information given to the Treasury, Safaricom was given the contract by direct procurement within the bounds of the law.
“I believe that because of the security challenges we have now, we couldn’t wait for this. Direct procurement can be used for projects of this nature. It is allowed in law so we have no problem,” said Mr Rotich.
THE ACTUAL COST
He said the actual cost of the contract is Sh14.9 billion, which would go up to Sh18.8 billion because of Value Added Tax and Excise Duty.
Because Safaricom must pay the Communications Authority of Kenya Sh6.8 billion to get the spectrum, the money they will be owed by the government will eventually be Sh12 billion.
Safaricom has given the government a one-year grace period, with the Sh12 billion then being paid in four annual instalments of Sh3 billion a year.
Mr Rotich said Safaricom has indicated it would be willing to stretch the payment over seven years, which would reduce the annual instalment to Sh1.7 billion, but all that would be dealt with when negotiations are complete.
He said the problems that had troubled previous security contracts and even the bid to set up the security surveillance system over the past five years, persuaded the government to opt for direct procurement.
“We’ll take measures to ensure the previous challenges don’t bedevil the current one,” said Mr Rotich.
Mr Rotich said the tax obligations of Safaricom company would remain while the dividends payable to the government as a shareholder wouldn’t be affected.