Parliament moves to amend laws to block Chinese contractors
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Parliament moves to amend laws to block foreign firms including Chinese contractors from projects below Sh20bn
Parliament moves to amend laws to block foreign firms including Chinese contractors from projects below Sh20bn.
Foreign firms will be locked out of government contracts below Sh20 billion if Parliament approves changes to the law that will hit Chinese contractors hard.
To protect domestic contractors, the Bill aims to increase the threshold for foreign companies bidding on taxpayer-funded contracts from Sh500 million to Sh20 billion.
The dominance of Chinese companies has locked out local contractors who are now losing out even on county roads and real estate projects.
China’s State-linked firms are getting ahead partly due to Chinese government loans, which have increased to $6.56 billion (Sh885.6 billion) in December as Beijing promotes investments abroad.
“The Bill seeks to amend section 157(8) of the Public Procurement and Asset Disposal Act, 2015 by deleting the word Sh500 million and substituting thereof Sh20 billion,” said Embakasi Central MP Benjamin Gathiru, who is behind the latest Bill.
“This is to protect local contractors from competition from international contractors. Kenyan contractors have the capacity to undertake government tenders of Sh20 billion.”
Under the Jubilee administration, a few Chinese corporations gathered road and infrastructure contracts worth Sh1 trillion, leaving Kenyan contractors to compete for smaller roads and subcontracts.
Nearly all government departments, ministries, and parastatals have come to love them for their quickness, financial heft, and negotiating skills after witnessing them devour the lunch of local businesses.
The majority of the road and railway contracts, totaling roughly Sh777.1 billion, are held by China Communications Construction Co (CCCC) and its subsidiary China Road and Bridges Corporation (CRBC).
Local companies have been pushed to the periphery as Chinese firms secure lucrative road, rail, and electricity contracts.
“The main objective is to raise the threshold that local firms can be granted exclusive access to government tenders not less than Sh20 billion,” said Mr. Gathiru.
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China’s influence on Kenya’s mega infrastructure development started gathering steam with the construction of the Thika Superhighway between January 2009 and November 2012 at a cost of nearly Sh32 billion in the last term of President Mwai Kibaki.
CRBC and CCCC have since bagged the lion’s share of Kenya’s mega projects — at least two railways, two ports, and 23 road projects.
They include the $3.5 billion (Sh472.5 billion) standard gauge railway (SGR), a $398 million (Sh53.7 billion) oil terminal at the Mombasa port, and road projects such as Southern, Western, and Eastern Bypass in Nairobi and the A109 National Highway Project.
The government earlier said they preferred Chinese firms due to their speed of delivery and costs while accusing local companies of shoddy jobs and uncompetitive bids.
Bu local contractors attribute the swift completion of work by the Chinese to timely payments while Kenyan companies have to wait for years, accumulating pending bills.
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