Kenya Insights

Tag: procurement

  • Court Halts Nairobi Hospital Procurements, Threatening Operations

    Court Halts Nairobi Hospital Procurements, Threatening Operations

    The operations at Nairobi Hospital are at a risk of being halted after the high court issued temporary orders barring the management from undertaking any procurement or taking a loan to run the hospital.

    This is after Samuel Muthamo Muchiri moved to court last week suing the Kenya Hospital Association trustees for allegedly running the company down.

    On Thursday Justice P Mulwa issued orders suspending the implementation of the Resolutions on election of Directors of the Board of Management and of elections of Trustee of the Kenya Hospital Association of 4th December 2024, pending hearing and determination of the application inter parties or until further orders of the Honourable Court.

    Further, the trustees have been barred from borrowing for any Capital Expenditure for Kenya Hospital Association, and or offering; executing or in any manner whichsoever using the assets of the Interested Party as collateral for a loan.

    “A temporary order of injunction be and is hereby issued restraining the 1st Defendant, whether by itself, agents, employees or anybody whosever acting on the 1s Defendant’s behalf from engaging in any form of Capital Expenditure, including equipment purchase, furniture and fittings, upgrade, and maintenance of physical assets such as property, plants, buildings, technology, or equipment, settling pending bills, spending on any new procured projects, any ongoing projects, and undertaking new projects or investments, pending hearing and determination of the application inter partes or until further orders of the Honourable Court.l,” the order reads.

    The Hospital has also been barred from floating or concluding any procurement of Capital services and Projects pending hearing and determination of the application inter parties or until further orders of the Honourable Court.

    Further, they have been temporarily barred from liquidating, encashing, or in any manner whatsoever utilizing or applying the funds belonging to and held by the Interested Party, Kenya Hospital Association, in Fixed/Call Deposits, Treasury Bonds, Infrastructure Bonds and Provident Fund, and or where liquidated from applying funds therefrom, wherever held, pending hearing and determination of the application inter parties or until further orders of the Honourable Court.

    In the court papers, Muchiri has accused the board of committing serious acts of malfeasance in breach of the duty to act for success of the company and duty to exercise reasonable care, skill and diligence as obligated by the law.

    He says that as a result of this the hospital has lost Sh 1.1 billion with a debt to supplies of nearly Sh 3 B.

    He further says the trustees intend to borrow off shore Sh 4.2 billion using assets of the company as collateral which will drive the hospital to insolvency.

    The trustees Prof Githu Muigai, Jane Nyakang’o, Prof Donald Orinda, Dr Meshack Onguti and Celia Ngalyuka have also been sued.

  • Dark Past Haunts Nairobi Water Manager As He Fights Transfer

    Dark Past Haunts Nairobi Water Manager As He Fights Transfer

    The dark past of Benedict Kiema Kavua the Procurement Manager of Nairobi City Water and Sewerage Company has caught up with him. He was recently transferred to a different department but rushed to the employment court to reverse the decision making many wonder as to why he would put such a spirited fight against the move yet his new station is not that far.

    Word is Kiema is buying time to to coverup suspected corrupt dealings that he allegedly got into while in office. City Hall insiders also claim that the besieged manager has been in the radar of investigative agencies including Directorate of Criminal Investigations (DCI) and the Ethics and Anti-Corruption Commission (EACC).

    In a quick rejoinder, Nahashon Muguna, the city water company’s managing director moved to court to stop Kiema’s application saying he had obtained the order blocking his transfer last month by concealing material facts from the court.

    Mr Muguna said due to the nature of the company’s mandate and as a matter of policy, it is expected that employees may be transferred or reassigned roles in order to achieve efficiency and optimum performance.

    “It is therefore clear that he (Mr Kavua) did not come to court with clean hands and in a bid to obtain the orders he sought, deliberately failed to disclose this aspect which is material to the matters in question,” Mr Muguna said in a statement filed in court.

    Speaking to Kenya Insights, an insider says Kiema’s fears are based on his past questionable deals and that an audit of the accounting books and records would expose him and also the irregular procurement practices he oversaw as supply chain manager.

    “Kiema is literally in trouble since a report on all requests for quotations is required on RFQ register (where bidders sign as they pick), appointments by the MD for opening and evaluation committee, opening minutes, evaluation minutes’ copies of LPOs and professional opinions.” said the source.

    Auditor Report

    In the auditor general’s report released last year, Nairobi Water lost over Sh10 billion in the financial year ended June 2022 due to faulty water meters, unreconciled financial statements and allowances paid to its staff.

    Auditor-General Nancy Gathungu said the utility firm, which supplies the commodity to city residents, sold a total of 96,404,533 cubic meters of water during the year under review.

    This translated to Sh5.63 billion of income using the rate of Sh58.5 per cubic meter. However, the water firm declared an operating income of Sh4.79 billion leading to an undeclared income of Sh848 million.

    Ms Gathungu also observed in the report that the water firm failed to declare an extra Sh200 million that was obtained as levy water and sewerage services levy to the customers.

    During the year under review, the water firm produced 192,787, 851 cubic meters of treated water but its records understated the volume of water produced by indicating it was 178,526, 912 cubic meters.

    This, the auditor general observed, led to a loss of Sh834 million as projected revenue. The report also indicates that the water firm lost up to 50 percent of its projected water sales, which is way above the 25 percent of the non-revenue water threshold that is allowed by the Water Services Regulatory Board.

    Although the official company records indicate the firm produced 178,526, 912 cubic meters of water only 96,404, 533 cubic meters were billed meaning that it lost a Sh9.8 billion according to the auditor general.

    The report notes that the volumes lost are inclusive of the water and sewer charges at the rate of Sh102.375 per cubic meter.

    Desperation

    Word is the embattled manager is disparately asking for money from his friendly suppliers to ‘fight cartels hell bent to oust me from City Hall’ the money he says is needed to ‘handle’ the big case he’s having in court, how he plans to handle it remains unknown.

    In his objection, Mr Muguna told the court company has the power to reorganize the company to improve productivity.

    He said Mr Kavua had been in the said management position since 2012 and therefore had 12 years of management experience.

    “It is therefore appropriate that his experience in the company should indeed be utilised in other departments and this is in line with best practices where movement of people has yielded better results and eradicated complacency,” he said.

    The Managing Director said that there was no arbitrariness or malice in the changes made. Furthermore, there is no major change of location that would cause prejudice if Mr Kavua reported to his new position immediately.

    Mr Muguna said in the contract signed in September 2010, it was clear to Mr Kavua that he would be required to serve the company in any part of the county.

    The managing director said Mr Kavua did not protest two years ago when he was transferred from his previous post and place of work to the head office to serve as supply chain manager.

    He said Mr Kavua did not protest but reported to the new post and reported on the same day he signed the letter.

    “So I am very surprised to see in his application before this court that he is complaining that he was not given adequate notice when in this case he is not even moving from the head office yet when he moved from the Western Region to the head office he did not protest and in fact reported on the same day the letter was given to him,” he said.

    Mr Muguna revealed that the company currently has 33 management positions, of which 28 are substantively filled and another five are in acting capacity. “This shows that it is important to make transfers when deemed necessary,” he said.

  • Why Ngugi Quit His Lucrative Job As Kenya Power CEO

    Why Ngugi Quit His Lucrative Job As Kenya Power CEO

    Kenya Power CEO Bernard Ngugi has stepped down and has been replaced by the General Manager customer service Engineer Rosemary Oduor.

    The electricity supplier, however, did not reveal the reasons for Mr Ngugis surprise exit but sources indicated boardroom wrangles forced his ouster.

    According to sources, the new Vivienne Yeda-led board that was chosen in November last year took an active role in management, including querying procurement decisions and dropping management’s strategy to increase tariff rates that officials believed would lift Kenya Power out of the red.

    “The board came with the mentality that Kenya Power is rotten and they have to clean the company. Their main focus has been on tenders where the board has been micromanaging,” said the source.

    “There has been bad blood between the board and the management and little is moving. Two months ago, the board sat to remove Mr Ngugi but there was a split.”

    Kenya Power has had four CEO’s in just four years a huge turnover at the troubled company’s most critical office.

    In 2018, Mr Ken Tarus was hounded out of office and charged along his predecessor, Ben Chumo, and a number of other senior managers for conspiring to commit an economic crime and abuse of office.

    He was replaced by Jared Othieno in acting capacity.

    Mr Othieno served up to 2019 and was replaced by Mr Ngugi, who was at the time head of the utility’s procurement division.

    Mr Ngugi’s tenure was marked by huge losses when Kenya Power sunk to a Kes 939 million net loss for the year ending June 2020 after getting a Kes 6.1 billion tax credit from lower corporate taxes given to companies to survive the vagaries of coronavirus pandemic.

    The tax credit lifted the company from a pretax loss of Kes 7 billion.

    The State corporation’s half-year profit as at December 2020 tumbled 80 per cent to Kes 138 million from Kes 692 million at similar stage in 2019 attributable to higher financing costs as a result of unrealized foreign exchange losses occasioned by the depreciation of the shilling against major foreign currencies.

    The electricity supply monopoly business was not able to meet its debts on time with US energy firm Ormat Technologies stating the amount overdue from KPLC was Kes 5.3 billion ($48.9 million) out of which Kes 1.7 billion ($16.2 million) was paid in January and February this year.

    The firm has also seen changes in the office of board chairman with Mahboub Maalim Mohamed replacing former House Speaker Kenneth Marende as the chairman and most recently Vivienne Yeda taking over.

    Ms Yeda told shareholders CEO’s at the company had turned the utility firm into a “procurement machine” and promised to plug the loopholes.

    Mr Ngugi, was in charge of procurement when the firm signed a contract with a private company for the supply of transformers, which turned out to be faulty.

    The Employment and Labour Relations Court in November 2020 dismissed a petition to remove Mr Ngugi from office due to integrity issues relating to the procurement of transformers when he was the general manager for supply chain.

    The petition was dismissed on the basis of a defective affidavit.

    Mr Ngugi was one of the few senior managers who remained at the firm after a procurement scandal forced out 10 others, including his predecessor, Ken Tarus.

    Mr Tarus, his predecessor, Ben Chumo and other senior managers were in July 2018 charged with abuse of office for allegedly entering into a contract with a private firm for the supply of transformers, which turned out to be faulty.

    Prosecutors said the deal also flouted procurement rules for State entities. Mr Ngugi’s exit now deepens the management instability at the power monopoly that last year sank into the first loss in 17 years.