The East African
Monday, April 02, 2007
Page 4

News
Drama unfolded recently around the ownership of the entity known as The East African Marine System (Teams) - the $80 million government-fronted fibre optic cable project linking Kenya to Fujaira in the United Arab Emirates.

Alarm bells sounded when the Solicitor-General, Wanjuki Muchemi, circulated a letter within the corridors of government saying that records at the Companies Registry showed that the name "Teams" had been registered by two private individuals - businessman Jaon Wachira Wambugu and quantity surveyor Dickson Kahoro.

Parallels were quickly drawn with what happened in 2000 when, just as Vodafone PIc of the UK was about to sign a joint venture with Telkom Kenya to create mobile phone company Safaricom Ltd It was discovered that airobi businessman, J.T. Chege, had gone ahead and registered a company bearing the name "Vodafone."The dispute that erupted nearly scuttled negotiations with the foreign investor. In his letter, Mr Muchemi said that the matter needed to be treated with "utmost urgency," pointing out that public resources to the tune of Ksh200 million ($2.86 million) have already been spent on implementation of the "Teams" project. "We are also aware that the government has extensively used the name 'Teams' in a number of documents including the memorandum of understanding with Etisalat," he added.

But there was a sigh of relief within the government when it emerged that the two private individuals had reserved the name "Teams" on the instruction of the Communications Commission of Kenya (CCK) - one of the implementers of the Teams project - in anticipation of execution of the project. Consequently, the two private businessmen have since transferred the ownership of the company to the government. Holding the shares on the government's behalf now are Information and Communications Permanent Secretary Dr Bitange Ndemmo and his Treasury counterpart Joseph Kinyua.

Analysts, however, remain puzzled over the curious fact that the government, which has its own lawyers, chose to incorporate the company using such a roundabout route, not only employing an outside lawyer but also an entirely private party in the person of a quantity surveyor. This is the second time the Solicitor General has taken issue with aspects of the project. In February, Mr Muchemi criticised the manner in which the award of the contract for a marine survey was awarded to Tyco International, arguing there had been no competitive tender process, Apparently, the ministry had in January sought and' was granted an exemption from open tendering by the Directorate of Public Procurement.

But the Solicitor General argued that the application to the directorate was not done according to procedure and demanded minutes of the technical evaluation committee that decided that the project be single- sourced. The ministry, it turned out, had obtained an approval for single-sourcing on the grounds of the onset of the monsoon season in the Indian Ocean and the consequent need to fast-track the project. In his latest intervention, the Solicitor General has lamented that the concerns he raised in February have not been heeded. On Thursday last week, Tyco announced that it had completed the marine survey at a ceremony that was attended by top Ministry of Information and Communications officials including the minister, Mutahi Kagwe, and permanent secretary Dr Bitange Ndemmo.

With the completion of the survey - at a cost of $2.7 million - the project is now set to advance to the more decisive stages, including the arrangement and mobilization of funding and equity. During the ceremony, Mr Kagwe announced that the government had appointed Standard Chartered Bank and Price water house Coopers as lead financial arrangers for the project, part of whose mandate will be to craft a plan for local investors to invest in the project by putting in equity.

The project is being developed as a public-private partnership arrangement in which the government will have 40 per shares, with Etilasat of UAE taking up 20 per cent and the remaining stake being left for interested regional telecommunications companies and fund managers. The Kenyan information and communications technology sector has for ears been held back by reliance on expensive satellite connectivity to international gateways.

Presently, there are several initiatives to introduce optical fibre connectivity. The planned $200 million East African Submarine Cable System, Eassy - an under sea fibre-optic cable from South Africa to Sudan via a number of landing points, including Mombasa - is the most ambitious of these projects. Because of the extensive delays with Eassy, Kenya decided to go ahead with Teams, under which an additional cable from Mombasa to Fujaira in the United Arab Emirates will be built.