The story of the Tower of Babel inspires the present-day infrastructure industry in many ways. Where the biblical literature specifies that in order to deter the people from constructing a tower to heaven, God apparently caused confusion with respect to the languages of all the workers, thus rendering it impossible for them to understand one another, the ancient literature on the Tower of Babel offers an example into the modern-day project management failures on various levels.
For Kenya, however, the construction of the Bunge Tower reprised the incident of the Tower of Babel, where due to a multitude of reasons, which included cost overruns, time overruns, and insufficient accountability, the construction of the tower has continued from the year 2010 and is yet to be completed in its entirety, even today.
The history of public-private partnership (PPP) projects in Kenya has been through a number of ups and downs. While the country has borne witness to various successful infrastructure projects undertaken on PPP mode, a majority of the projects have faced a multitude of issues, many of which have caused great delays in completion, thus leading to enormous losses to the Kenyan administration.
With its Vision 2030 being in progress since 2008, these delays, failures, and losses, raise additional concerns with respect to the ability of the Kenyan administration, to achieve the milestones of becoming a middle-income country.
Public-Private Partnership Projects and Failures – Meeting the Imaginations of the Administration
"Megaprojects are imagined before they come into existence and in doing so, they create imagined failures.1"
The aforementioned statement has proven to be slightly true to the country of Kenya, where PPP projects have faced multi-faceted issues, primarily due to the inconsistencies between the expectations of the administration and the actual implementation of the projects.
A glaring example of the aforementioned shortcomings may be evident through the Standard Gauge Railway (SGR) Project, which was the 'largest infrastructure project since the independence of Kenya'2. Being developed on PPP mode, the construction of SGR was undertaken by the China Harbour Engineering Company Limited (Contractor), after receiving funding from the Chinese Exim Bank. However, since the very beginning, project development faced a bundle of issues in terms of budgetary concerns, as well as the larger question relating to a lack of transparency in the unilateral appointment of the contractor sans a proper tendering process. Amidst such issues, while a phase of the SGR was completed and made operational in 2017, the awarding of the project in itself became a subject of a number of controversies, which ultimately led to the filing of a case before the Courts of Kenya. Even though the judicial process ended in 2023, when the Supreme Court ruled in favor of the Government, the SGR continues to be 'under construction' costing the citizens of Kenya, approximately Sh37.9 million3 or even more, on a daily basis.
Even though, the SGR became a great lesson, its failure was followed by the unduly expectations attached to the development of the Lamu Port-South Sudan-Ethiopia Transport (LAPSSET) project. The ginormous project promised an apparent boon to Kenya's economy by offering the construction of multiple ports, roads, and airports connecting the port of Lamu with South Sudan and Ethiopia. The high expectations bore little to no fruit, however, due to an apparent failure on part of the administration to account for various complications like a massive destruction of the environment, including a UNESCO declared cultural heritage site which was well present within the project stretch. This miscalculation subjected the administration to grave criticism and hinderances during the construction process. Another complication arose due to the inability to account for the assailant filled stretch of the project, which inevitably led to the demise of many construction workers at the hands of the assailants.4
Vision 2030 and the Post – 2021 PPP Law Era
The aim of Vision 2030 is the pursuit of global competitiveness and prosperity in order to offer Kenyans a high quality of life by 20305.
The many failed PPP projects revealed a dark side to the project management capabilities of Kenya and provided an adverse inference to the internationally located private participants, which were the primary focus group for the Kenyan administration to attain its vision of development. That said, the December of 2021 was marked by a redeeming action on part of the Government, in the form of the Public Private Partnership Act, 2021 (PPP Act 2021 or the Statute).
The statute offered a renewed perspective towards the execution of PPP projects in Kenya by providing for special provisions supported by established procedures to streamline the development of projects, thus, reducing the possibility of hinderances. Some of the key features exhibited by the PPP Act 2021, were the setting up of the PPP Committee, the Directorate of PPP, and the PPP Petition Committee.
As per the Statute, procurement methods were classified into direct procurement, privately initiated procurement, and competitive bidding, whereby the Government removed the ambiguities surrounding the unilateral appointment of contractors, and further offered transparency in the provisions detailing evaluation of bids, and success fee in contracts.
The PPP Act 2021 was hailed to be a changemaker legislation and was supposed to be supported by the Draft PPP Regulations, 2022, wherein the latter was the key to the necessary implementation of the Statue. Due to certain reasons, best known to the administration, the Draft Regulations are yet to be enacted, thus, having the inadvertent effect of rendering certain crucial provisions of the Statute, toothless. The resultant inadequate implementation of the Statute may be visible from the controversy surrounding the development of the Jomo Kenyatta International Airport, wherein while the awarding of the project to an Indian Conglomerate was in line with the provisions pertaining to privately initiated procurement, the signing of the contract itself faced intense protests due to an alleged lack of transparency, and the supposed one-sided agreement which allowed the Indian Conglomerate to operate the airport terminal for 30 years from the date of development at the cost of the Government.
That said, the PPP Act 2021 has been largely successful in bringing about a positive change in the infrastructural development of Kenya, wherein, the country has been witness to various successful PPP projects, including the Nairobi expressway Project. While having commenced prior to the implementation of the Statute, the expressway became the first largely successful PPP-DBFOT project to have been completed in 2022, and has since been operational. In addition to the expressway, the PPP Act 2021 has also seen great success in other road sector projects as well as the power sector projects, many of which have been operational and are on the verge of becoming a testament to the remarkable step, that is the Statute.
Taking a Chit from the International Sphere – The Implementation of PPPs across the World
It is an undoubted fact that PPPs carry with them, a range of advantages which seem lucrative to the governments across the world. This is one of the primary reasons why the method has been adopted by various developing and developed countries for bringing about a positive transformation to their economies. For an efficient implementation of the projects, governments across the world, have worked in a collaborative manner with the project companies, and have even established set policies and regulations which, while not completely fool-proof, have been mostly successful in facilitating an optimum realization of the benefits attached to the method of project development. The efforts put in during a number of such projects may thus, act as examples for the Kenyan Administration, for assessing the best international practices and inculcating the same within the country's regulations.
The Daang Hari-SLEX Link Road project in the developing country of Philippines is one such example, where the government faced a bundle of issues which threatened incorrigible delays in project completion and financial closure. Through a collaborated effort and swift response, however, these issues were handled with care, thereby facilitating the initiation of the operational period in the year 2015. One such issue was faced by the Procuring Authority when, even though it had acquired a large portion of the land prior to the initiation of development, certain parcels remained to be acquired, which lead to intense negotiations and diverse litigations during the project development phase. The complexities were dealt by the Procuring Authority in a professional and swift manner, thus, minimalizing the resultant delay caused to the project. The Procuring Authority further proved its worth, when due to certain necessary and unanticipated design variations, a substantial increase in the project scope was caused. For such increase, the Authority reacted rapidly, by sufficiently compensating the Project Company, and thereafter making wise use of the lesson, to work on assessing such design variations in other ongoing and future projects, before the same could arise. Through the regular monitoring of the project by the Procuring Authority, and the collaborative approach adopted by both the parties, the project was completed without any severe delays6.
The developing country of Cameroon holds another example in the form of the Kribi Gas Fired Power Project, which was completed, albeit with minor delays, but through a comparatively efficient response of the Procuring Authority, alongwith the assistance of the World Bank. The Kribi Project was the first gas-to-power PPP being implemented in Cameroon and in the Central- African region, under a traditional project finance structure and it was anticipated that the success of the project would pave way for the country to make significant public investments as well as in mobilizing private sector investment7. During the execution phase, the project faced various operational challenges including the unavailability of local debt facilities for long tenures, which was vital for the project. With the assistance and advise of the International Financing Institution, and through a progressive approach of the Procuring Authority, the project attained due financing, and attained closure, with a minor delay of 6 months.
While there have been many other successful PPP projects undertaken by developing countries, which have surpassed the challenges through efficient collaborative approaches and expedited response time, the aforementioned cases provide ample insight into the steps which may be necessary to be taken by both the procuring authorities and project companies, for deriving adequate benefits offered by the mode of development. In this respect, it must also be emphasized that for a developing country like Kenya, it may be additionally beneficial if the numerous case studies and best international practices of the other developing countries are kept into consideration, in order to reduce any complications, which may otherwise, not be witnessed by developed or highly developed countries due to their ample accessibility to resources and income.
Setting foot into an Affluent Future
As may be observed from the execution of PPP projects across the world, many countries face a number of challenges during the project execution period, however, the key in these cases lie within the manner and the time of the responses of the Procuring Authorities and project companies, which may make or break the projects at hand.
For Kenya, while the key may also be derived from a change in the way the projects are designed and concession agreements are framed, viz. appropriate and efficient risk identification, risk allocation, and a balanced distribution of project obligations, another important factor, however, may lie in the swift and adequate implementation of the supporting PPP regulations to the PPP Act 2021. This implementation may bring about increased stringency, and compliance towards the Statute, which may be further strengthened through the added powers of various functionaries empowered under the PPP Act 2021. Thus, while the Tower of Babel may or may not have been reprised in Kenya in the past, through an adequate management of the future PPP projects, combined with appropriately implemented regulations and policies, projects may see a better and brighter future in the country as time passes.
Footnotes
1 Detlef Müller‑Mahn et. all, Megaprojects – mega failures? The Politics of aspiration and the transformation of rural Kenya, EJDR 1069, 1073 (2021).
2 Oscar Otele, China's Approach to Development in Africa: A Case Study of Kenya's Standard Gauge Railway, Council on Foreign Relations 1, 4, https://www.cfr.org/sites/default/files/pdf/Otele_A%20Case%20Study%20of%20Kenya%E2%80%99s%20Standard%20Gauge%20Railway.pdf.
3 Business and Human Rights Resource Centre, https://www.business-humanrights.org/en/latest-news/kenya-high-cost-of-stalled-railway-project-demonstrate-how-land-disputes-with-locals-could-impact-infrastructural-projects/ (last visited Oct. 25, 2024).
4 Nation, https://nation.africa/kenya/news/al-shabaab-ghosts-haunt-sh17-9bn-lapsset-project-4528782#story (last visited Oct. 25, 2024).
5 Vision 2030, https://vision2030.go.ke/about-vision-2030/ (last visited Oct. 25, 2024).
6 PPIAF, https://managingppp.gihub.org/case-studies/daang-hari-slex-link-road/ (last visited Oct. 25, 2024).
7 World Bank, https://ppp.worldbank.org/public-private-partnership/library/cameroon-kribi-power-plant (last visited Oct. 25, 2024).
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