Bechtel Mombasa-Nairobi Expressway project background

Ambassador McCarter has been engaging with Kenyans on Twitter following an Embassy media release on US support for the proposed Mombassa-Nairobi expressway.

For background:

U.S. withholds funding for Sh. 300 billion Mombasa-Nairobi expressway. This was the news on May 27, 2019, as reported from A1Autoservice,Ltd.com:

Nairobi-Mombasa expressway funds stalled 

The US Government has temporarily shelved funding for the proposed Sh. 300 billion Nairobi-Mombasa expressway over cost implications. The construction of the 485-kilometre road to ease perennial traffic snarl-ups was to be done by American engineering firm Bechtel after Kenya and US struck a deal during last year’s meeting between Presidents Donald Trump and Uhuru Kenyatta at the White House. The US ambassador Kyle McCarter, said the US was scrutinising the proposal to establish whether Kenyans would get value for their money. He said the cost was in question at a time when the country is struggling with piling debt. 

Responding to queries whether Bechtel had lost the contract to China, McCarter said: “Bechtel did not lose the deal, we are still working on the finance. Kenya has a challenge of debt and we are wary of burdening Kenyans”. “We did not want to sign onto a project whose cost would turn out to be three to four times higher than the actual. We want to ensure there is an honest return on investment for Kenyans before we break ground.” 

In 2015, PriceWaterhouseCoopers (PwC) — in a feasibility report — indicated that the costly project was viable.McCarter said US zero tolerance for corruption forced them back to the drawing board and would only embark on the project once they are satisfied it guarantees value for money for Kenyans and will not sink the country deeper into debt. 

The envoy affirmed US support for the war against corruption and termed the plunder of public coffers an act of outright thievery. “Calling it corruption makes it mystical, like those behind it share the proceeds with the nation. But the truth is that it is simply taking what is not yours and that is thievery,” he said. 

The proposed road will be a dual-carriage motorway with four lanes to ease congestion and cut travel time between the two cities from the current 10 to about four hours.It will run parallel to the current Nairobi-Mombasa highway and will help promote trade and movement in Kenya and the neighbouring countries of Uganda, Rwanda, Burundi, DRC and South Sudan. 

Working documents on the project show that it is expected to start any time after the June budget release.Bechtel estimates that construction of the expressway will create 500 jobs and involve local businesses supplying up to 100,000 tonnes of cement and 40,000 tonnes of steel.

Here is a digest of stories on the project from July 2017 to July 2018:

The battle for road tenders hots up as U.S. giant opens Nairobi office, Construction Kenya, July 11, 2017:

. . .

As a starting point, the US construction giant has already expressed its interest in the forthcoming expansion of the 485-kilometre Mombasa-Nairobi highway into a six-lane dual carriageway.

The US Export Import Bank is strongly pushing Bechtel to secure the contract in an arrangement similar to that of the China Export Import Bank where the Asian bank funds projects contracted to Chinese firms.

“With the support of the US government agencies such as Overseas Private Investment Corporation (OPIC) and the Export-Import Bank, we can provide solutions to move this critical project forward quickly with a high standard of quality,” Mr Patterson added.

The entry of Bechtel – along with its financial backing by the US Exim Bank – will complicate matters for Chinese multinationals who have been winning all tenders for projects financed by the China Exim Bank. . . .

U.S. firm wins deal to build Kenya’s first high speed highway, Construction Kenya, Aug 17, 2017:

US-based engineering firm Bechtel International Inc. has signed a Sh230 billion commercial agreement with the Kenya National Highways Authority (KeNHA) for construction of a 473-kilometre Nairobi-Mombasa high-speed expressway.

KeNHA director general Peter Mundinia said the signing of the deal has paved the way for the next stage of mobilisation of financing from export credit agencies in the United States of America.

. . .

It is expected that agencies such as the US Export-Import Bank and the Overseas Private Investment Corporation (OPIC) will finance the project.

“It is projected under the proposed commercial contract that the 473km highway will be completed in ten sections within the next six years,” Mr Mundinia said.

The first section, from the junction with Namanga Road near Kitengela will have an interchange near Konza ICT City and a spur road to Kyumvi (Machakos Turnoff) on Mombasa Road. This section is anticipated to open to traffic in October 2019. . . .

U.S. rejects Kenyan press criticism of $3B Bechtel roads deal, Global Construction Review, Sept. 25, 2017:

The US embassy in Kenya has rejected a newspaper’s criticism over a $3bn road contract awarded to Bechtel without competitive bidding.

The embassy said the Nairobi-to-Mombasa expressway had been under discussion for two years, and had been evaluated to ensure Kenyans receive value for their money. 

It also rejected press claims that the award was a “thank you” to the US for its political support of the Uhuru Kenyatta government. 

On 13 September, the day after the article appeared, the embassy tweeted: “US private firms (bound by US anti-corruption laws) investing in Kenya’s future bring jobs, tech transfer and development. This expressway has been under development for two years to bring best value. The US embassy does not and will not give political favours for commercial deals. On Kenyan election 2017, we’ve been and will continue to be strictly neutral.”

Kenyan government officials also defended the Bechtel deal. Peter Mundinia, director general of the Kenya National Highways Authority (KeNHA), said on 18 September that Bechtel was selected because of its experience of handling large infrastructure projects “over 119 years”.

He added that the Kenyan government had entered into an agreement with the US government in July 2015 whereby US companies would develop key infrastructure projects with US funding.

The US and Kenyan authorities were responding to an article in Kenya’s Financial Standard newspaper that questioned the way the project was announced and quoted from a Ministry of Transport briefing, carried out before the contract award, which argued the project should be put out to tender as a public–private partnership (PPP).

The Standard highlighted the fact that contract for the 473km A8 expressway between Mombasa and Nairobi was announced three days before the 8 August general election, and broke with established practice by being made without a Ministry of Transport press conference or an announcement from the president’s office. 

Instead, the announcement was made on a Saturday afternoon when government departments are usually closed, and made no mention of the project’s estimated price. 

The newspaper drew a comparison with the way the government had awarded the country’s standard gauge railway (SGR) scheme to Chinese contractors before the 2013 general election. In both cases the winner was appointed without putting the work out to competitive tender. 

In the SGR case, the choice was determined by the fact that China was making the funding available for the line; in the case of the motorway, the motive was to thank America for an “unspecified service” that the US had done for Kenya, according to unnamed “government insiders” quoted by the Standard.

According to the Standard there are now concerns within the Kenyan government over the amount of debt the country is taking on. The combined cost of the rail and road link between the country’s main port and the capital is likely to be at least $6.7bn, or almost 10% of the country’s GDP.

The controversy comes at a sensitive time in Kenya after the results of the 8 August election, which recorded a victory for the country’s incumbent president Uhuru Kenyatta, were annulled by Kenya’s Supreme Court on 1 September. 

The court cited irregularities and illegalities in the transmission of results and ordered the election to be held again within 60 days. It is due to take place on 26 October. Kenya has a history of serious post-election violence.

Nairobi-Mombasa expressway project dogged by serious concerns, Construction Kenya, July 4, 2018

Almost a year after Kenya signed a deal with US engineering firm Bechtel for construction of a Sh300 billion high-speed expressway between Nairobi and Mombasa, the two parties are yet to agree on how to finance the project despite a series of extremely high-level talks.

On the one hand, the Kenyan government wants the 473-kilometre Nairobi-Mombasa expressway to be completed through the Public Private Partnership (PPP) model where private investors will build and operate the facility for up to 25 years – charging toll fees – to recoup their investments and margins.

On the other hand, Bechtel International is opposed to the PPP model which it says will cost the Kenyan taxpayer Sh540 billion over next 25 years.

The company has therefore urged Kenya to undertake the project under an engineering, procurement, construction and commissioning (EPCC) contract.

Under the EPCC model, a contractor is obliged to deliver a complete facility to a developer who needs only to turn a key to start operating the facility; hence such deals are sometimes referred to as turnkey construction contracts.

But the government, which is concerned about the fast rising public debt, has made its stand clear. . . .

“We will commence detailed discussion on how the financing approach will be undertaken under that project. We will be discussing modalities, financing structuring and the details for us to be clear on how to undertake this project,” Treasury secretary Henry Rotich said on Tuesday.

Ranneberger’s Gainful Solutions subcontracted Washington Media Relations/Monitoring and Outreach to Sanitas in July after previous pummeling on news of hiring by Kiir Government

Here is the July 19 subcontract agreement between Gainful Solutions and Sanitas as attached to the August 13 Foreign Agent Registration Act filing.

The Gainful Solutions-Sanitas deal was announced appropriately enough through Politico with a professional spin on Gainful Solutions “amending” the original contract with Salva Kiir under which they received the initial $1.2M non refundable cash payment from the Kiir government.

Those that are interested enough to follow the links and read the documents will notice that the “subcontract” goes well beyond the actual contract, raising the question of whether Sanitas could be paid to say things in Washington by Gainful Solutions that Kiir did not commit to in his contract (the April 2 contract initially paid , or the May 7 substitute).

This is the Prime Contract scope of work:

The Consultant services will include, but not necessarily be limited to, thefollowing:

1 Open a channel of communication between President Kiir and President Trump with the objective of persuading President Trump and his administration to expand economic and political relations with South Sudan, and supporting American private sector investment in South Sudan in oil, natural resources, energy, gas, mining, and other areas.

2 Improve bilateral relations between the United States and South Sudan.

3 Address sanction issues.

4 Seek the support of the Trump administration to unite the various ethnic groups of the country in order to build a stable and prosperous country.

5 Mobilize American companies to invest in the oil. natural resources, and other sectors

6 Persuade the Trump administration to open a military relationship with South Sudan in order to enhance the fight against terrorism and promote regional stability.

The Consultant will act as the agents of the GOSS, Office of the President, to facilitate and negotiate with American and Western companies for investment in South Sudan. The Consultant shall be entitled to certain residuals, compensation, commissions, or shareholding resulting from its facilitation and negotiation with American and Western businesses.

The Services will also include any other consulting tasks which the Parties may agree on.

Here is Ranneberger on Eye Radio from an August 15 interview doing a local media roll out: “Ranneberger indeed hired to smooth Juba–Washington DC relations“:

In an exclusive interview with Eye Radio yesterday, Ambassador Ranneberger admitted that the first draft of the contract that was brought to the attention of the public had the provision to stop or block the formation of the hybrid court.

“There was a bit of a mix up with the first draft of the contract and it got published, but you can look at our contract on the website –which the President [Kiir] has approved, and it says nothing about the hybrid court,” Ranneberger said Thursday.

He, however, confirmed that part of the campaign will include convincing US to ease sanctions on South Sudanese leaders.

As I noted on Twitter I do not understand what “a little bit of a mix up” or “first draft” means. The original contract was signed and filed with the Justice Department and according to the filings the nonrefundable initial fee payment of $1.2M of the $3.7M paid. After the barrage of criticism in the international media and organized opposition from South Sudanese civil society the contract was “cancelled” on May 2 and a second contract signed May 5, reflecting that the $1.2M was already paid. See South Sudan: New Salva Kiir-Ranneberger Foreign Agent filing shows $1.2M nonrefundable retainer already paid and $3.7M flat fee (contra Reuters).

Kenya 2007 election- Ambassador Ranneberger and Connie Newman at polling station NairobiMichael Ranneberger (Ambassador) and Constance Newman (Election Observer) at poll in Nairobi, December 27, 2007

The Registered Agents for South Sudan at Gainful Solutions are Rannberger, and his fellow ex-diplomats Connie Newman and Tim Towell and the other principal in the firm Sohai Nazari-Kangarlou.

Watching Alliances Experience “Blow Out” from a Build Up of Democratic Pressure

Its a beautiful spring day here in coastal Mississippi.  A nice day for a Mardi Gras parade and to rake leaves, which we do here in the spring instead of the fall, and to watch events unfold in Africa.  As election results are coming in from Uganda, the Libyan army is attempting to repress a budding revolution against Museveni’s recent friend from the north, Col. Gaddafi.  Of course, Museveni is not the only one who has been cozy with the theatrical Libyan dictator, oil baron and would-be “Pan African” leader.

From today’s Guardian, “Britain’s alliance with Libya turns sour as Gaddafi cracks down”:

Now Britain’s risky and controversial relationship with Libya is beginning rapidly to unravel.

BP, which is also heavily involved in the country, is weeks away from beginning a major drilling operation in a vast area around the desert town of Ghadames. Indeed, a group of US senators last year suggested that the decision to free the Lockerbie bomber Abdelbaset al-Megrahi could have been influenced by lobbying over BP’s commercial interests in Libya — an allegation fiercely denied by the Scottish government.

And it is not only Britain’s foreign policy on Libya that has sent diplomats scurrying into disarray as they have tried to keep up with the wave of popular uprisings against regimes that Britain supported, but the policy for the entire region.

According to Claire Spencer, head of the Middle East and North Africa programme at Chatham House, the rapprochement with Libya in 2004 was founded on assumptions that dominated for a decade post-9/11, obsessed as the west was with the fight against al-Qaida, the wider “global war on terror” and fear of mass migration and the rising influence of Iran.

“Against that we backed the other half, the so-called moderates standing up for our values – regimes in places like Saudi Arabia, Egypt and Israel.” The domination of that foreign policy agenda, she believes, meant that not only in the Foreign Office but in the Quai d’Orsay and the US State Department, those warning of the growing potential for unrest across the region were ignored.

Though Libya had faced accusations of refusing to recognise the rights of refugees, indefinite detentions, torture and arbitrary expulsions, Spencer believes that British diplomats felt they had only the most limited leverage on their new partner.

By yesterday the queasiness had turned to outright horror, as Britain’s foreign secretary William Hague, a day after his department revoked all British arms licences to Libya and Bahrain, condemned the “unacceptable and horrifying” use of violence by Gaddafi’s security forces against his own people, “including reports of the use of heavy weapons fire and a unit of snipers against demonstrators”.

Which leaves the crucial question of whether Gaddafi can survive. In the past, as Spencer points out, the self-styled Supreme Guide has been adept at ditching prime ministers and others to protect his position and place himself on the side of the people, a tactic he tried to use even in the current protests. Now he has abandoned that in favour of the use of outright violent suppression.

If he believes that he can confine the problems to the country’s east, he may be mistaken. Many from that region have families in Tripoli. He may find it impossible to stop rebellion spreading.

And Britain’s manoeuvring to distance itself from the man it has supported for the last seven years may have come too late.

Needless to say, here on the Mississippi Gulf Coast BP has not been especially popular since last April. I don’t think many people here have paid especially great attention to Gaddafi, but neither I suspect, have they been particularly confused about him.

I pulled out a copy the other day of a J. Peter Pham column from World Defense Review from March 2010 entitled “Libya as an African Power” which I would encourage you to read and reflect on:

The breakout came in 1997 when the annual summit of Organization of African Unity foreign ministers was held in Qadhafi’s hometown of Sirte (some of the diplomats attending were only able to do so because Libya paid their country’s arrears to the pan-African organization, thus restoring their voting rights). The foreign ministers also set up a five-member committee to mediate between Libya and the West over the Lockerbie dispute. On the heels of the summit, Uganda’s President Yoweri Museveni and South Africa’s President Nelson Mandela both visited Tripoli. African backing proved critical to the breakdown of the sanctions regime and the subsequent agreement to hand over two Libyan suspects for trial in the Netherlands under Scottish law for the Pan Am bombing.

Meanwhile, Libya’s strategic engagements across Africa multiplied—a state of affairs symbolically demonstrated by the change in name of the country’s state broadcaster from the “Voice of the Greater Arab Homeland” to the “Voice of Africa.” .  .  .  .

Even the creation of the African Union in place of the tired Organization of African Unity has a Libyan connection that is usually glossed over. In response to an initiative promoted by Tripoli, the OAU Assembly of African Heads of State and Government met in extraordinary session for only the fourth time in its nearly forty-year history at Sirte in September 1999. In the resulting “Sirte Declaration,” the African leaders professed to have been “inspired by the important proposals submitted by Colonel Muammar Qadhafi, Leader of the Great Al-Fatah Libyan Revolution, and particularly, by his vision for a strong and united Africa, capable of meeting global challenges and shouldering its responsibility to harness the human and natural resources of the continent in order to improve the living conditions of its peoples” and resolved to “establish an African Union” better able to “cope with the challenges and to effectively address the new social, political, and economic realities in Africa and in the world.”

.  .  .  .

Considerably more important than its role as a donor of development assistance has been Libya’s role as an investor in Africa. A government entity, the Libya African Portfolio for Investments (LAP), overseen by the country’s main sovereign wealth fund, the Libyan Investment Authority (LIA), numbers among its companies the Libyan Arab African Investment Company (LAAICO), which has a mandate to promote business growth in Africa by investing in sectors as diverse as agriculture, mining, manufacturing, real estate development, telecommunications, and tourism. Currently, LAAIC has holdings in some more than two dozen African countries, including Benin, Burkina Faso, Central Africa Republic, Chad, Comoros, Congo (Brazzaville), Democratic Republic of Congo, Eritrea, Ethiopia, Gabon, The Gambia, Ghana, Guinea, Kenya, Liberia, Madagascar, Mali, Niger, Nigeria, Rwanda, South Africa, Togo, Uganda, Zambia, and Zimbabwe. Another LAP company, the Oil Libya Holding Company (formerly Tamoil Africa), is engaged in refining, marketing and distribution of petroleum products in a similar number of African countries. In Morocco, for example, the Libyans have invested more than $5 billion to acquire about 200 gas stations, approximately 10 percent of the local market. Yet another LAP asset, LAP Green, has had telecommunications operations in Côte d’Ivoire, Niger, Rwanda, and Uganda. Last month LAP Green acquired 80 percent of Gemtel in South Sudan and the company has been shortlisted among the suitors seeking to acquire a 75-percent stake in the Zambia Telecommunications Company (Zamtel) being offered by the Zambia Development Agency.

.  .  .  .

Uganda is a good example of a case where Libya’s investments have served its strategic objectives while simultaneously helping the target country’s economic and social development. There are few African countries where Tripoli’s past interventions were so much on the wrong side of history.  .  .  .

.  .  .  . Currently at least $500 million in Libyan capital is participating in Uganda’s growing economy. Libya owns a 49-percent stake in the National Housing and Construction Company (NHCC), a public enterprise with a mandate to increase the housing stock in the country, rehabilitate the housing industry, and encourage Ugandans to own homes in an organized environment. Libya also owns 69 percent of Uganda Telecom Limited (the Ugandan government owns the other 31 percent), where its capital has been used to aggressively expand the company’s market share. In a joint venture with the Uganda Coffee Development Authority (UCDA), Libya has invested in a soluble coffee plant that adds value to Ugandan production by making it compliant with European standards. Libya also has the contract to build an extension of the Mombasa-Eldoret oil pipeline in Kenya to the Ugandan capital of Kampala. The extension will be designed to permit reverse flow once Uganda begins its own petroleum production. Earlier this year, a team from Oil Libya visited Uganda to explore the possibility of building an oil refinery.

The Qadhafi regime’s decision in 2003 to abandon its WMD program, settle the Lockerbie claims, and give up its hitherto support of international terrorism (the United States removed Libya from its list of state sponsors of terrorism in 2007) led to the lifting of numerous economic and trade restrictions as well as the ban on American citizens doing business there. The potential economic and political rewards of deciding to work with instead of against Washington may actually strengthen Tripoli’s capacity in dealings with the rest of the African continent, especially the poorer states of Sub-Saharan Africa.

Given some of the anti-Western, post-colonial rhetoric that has emanated from Tripoli over the years, it may be surprising for some to learn that since the thaw in bilateral relations with Washington, Libya has even demonstrated greater openness to the U.S. Africa Command (AFRICOM) than some other states on the continent. AFRICOM Commander General William E. “Kip” Ward actually traveled to Libya twice in 2009 and met with Colonel Qadhafi .  .  .

Thus last May, the U.S. Coast Guard Cutter Boutwell arrived in Tubruq for a three-day port visit that was the first of any U.S. military vessel to Libya in more than four decades.  .  .  .  The visits were returned in September when a delegation of three senior Libyan officers visited AFRICOM headquarters in Stuttgart, Germany, as well as U.S. Air Force Africa headquarters at Ramstein Air Base.During the officers’ visit, General Ward gave an unprecedented interview to Al-Musallh, the official journal of the Libyan armed forces, in which he described his discussions of African security matters with Qadhafi and “we look forward to working together in ways that help us achieve those common objectives for peace and stability.”

In the interest of renewing links to professionals in the Libyan military and security services after a nearly four-decade hiatus, the Bush administration requested $350,000 in State Department-administered International Military Education and Training (IMET) funding for Libya in fiscal year 2009. The Obama administration requested the same amount for the current fiscal year, specifying that the funding would be used for English language education as well as courses on civil-military relations, border security, and counterterrorism (Libya has been invited to join the U.S.-led Trans-Sahara Counterterrorism Partnership). In addition, the Obama administration budget also allocated, for the first time ever, a token $250,000 in Foreign Military Financing (FMF) to provide assistance to the Libyan air force in developing its air transport capabilities and to the Libyan coast guard in improving its coastal patrol and search-and-rescue operations. As significant as these steps may be, there is no reason why bilateral cooperation should not extend to other spheres. As Saif Aleslam al-Qadhafi, noted at the start of the U.S. rapprochement with his father: “Libya does not envisage limiting relations to fighting terrorism. It proposes joint efforts, for example, to meet the needs of Africa by eradicating disease and promoting investment.” .  .  .  .