Kenyans to lose Ksh2.5b as KRA stops Swiss firm contract

MPs now want the KRA to explain why it decided to re-advertise the tender rather than remaining with the present supplier and purchasing the stamps at a discounted rate starting in July 2024.
The problem first came to light yesterday when Swiss company SICPA, which is currently carrying out a service contract to monitor the production of cold beverages like beer and soft drinks, appeared before the National Assembly Public Investments committee on Commercial Affairs and Energy to provide more information on the contract.
According to documents presented to the committee, KRA paid SICPA Ksh2 billion for a five-year license of the Excisable Goods Management system in 2015 using taxpayer funds.
According to the agreement, SICPA was to run the system until June 2024, at which point the taxman would take over management.
A 2021 modification to the deal said that the company would also do equipment maintenance tasks for a further year, beginning in July 2024, during which time it would charge half the present price for the stamps.
However, the oversight committee was alerted to KRA’s attempt to cancel the contract in favor of a different supplier through an expression of interest in April, and it launched an investigation into the subject.
If KRA goes ahead with the contract termination, according to SICPA management, billions of shillings could be lost.
“We’re unsure of the purpose of KRA’s expression of interest advertisement. According to us, the contract was followed and legitimately carried out, “said SICPA Chief Commercial Officer Gianni Santoro.
However, the David Pkosing-led committee wanted to know if the company had received a report outlining any gaps that would have caused the taxman to terminate their contract after ten years.
“Did KRA discover a flaw in your system that would justify their actions? Have they performed any assessments and given you the results to demonstrate why they chose a new system?” Pkosing poses.
SICPA said that they had not received any complaints from KRA regarding their performance of the contract and that they had not also been given an evaluation report demonstrating their unfitness for the position.
The committee also learned that KRA lacked the necessary resources to operate the system, despite a clause mandating its transfer to the taxman following the end of the contract time.
This led to the MPs pointing out problems with the contract, with Laikipia East MP Mwangi Kiunjuri asking how KRA was supposed to run the system once it was given to them.
“How can you possess something that I won’t be able to use the next day if you leave it with me? What will happen then if KRA decides not to extend the contract?” Kiunjuri was posed.
Donald Karauri, a Kasarani MP, questioned whether SICPA had received political favors in order to win the contract, further implying that the company had held KRA captive in order to guarantee that it could only get the contract.
Santoro responded, reiterating that no justification had been found to compel the cancellation of the contract. “The equipment servicing will be done by us as required by technicalities of our security contract even after our contract has been discontinue,” he added.
The Chief Commercial Officer further cautioned that if KRA went ahead and terminated the contract, taxpayers would be forced to pay extra for the cost of a new system.
“Because it has taken us time over the years to develop the systems and provide solutions, purchasing another system would undoubtedly cost more money,” he added.
The excise duty stamps tender was recently moved to be cancelled, and the committee now fears that tender warfare may be to blame. As a result, it has called KRA to testify before it.
”It’s possible that a rival company is attempting to have SICPA services discontinued so that it can defraud Kenyans.To help Kenyans make an informed choice, I believe that we need to compare how services are provided.” Said Pkosing.