re: Team To Audit Postal Corporation Deal With US Firm

From: Dr. Peter Okoth

If you have forgotten, what we are voting against is what is here below!

http://publications.marsgroupkenya.org/
GAP_Report1_Satspace/GAP1_Report_Part2.pdf

Team To Audit Postal Corporation Deal With US Firm

Daily Nation

Tuesday, March 22, 2005

Page BW1

Business

A special audit has been ordered into a multi million project in which the Government contracted an American firm to provide data network and internet satellite links to Postal Corporation of Kenya.

The auditors will determine if the Government received full value for its money from the project, and whether the contracted price was fair. According to available documents, the contract was signed in July 2002, with Universal Statspace North America LLC at a price of Sh 2.2 billion, under terms whereby the loan was to be paid in five and a half years. An international retailer of bandwidth, with registered offices in the US, Tel Aviv, and Singapore, it was obligated, under the contract, to provide bandwidth and network management services for a period of 10 years, to 980 post offices across Kenya.

Another company, Spacenet International Inc, signed a separate contract to supply satellite equipment and computers to the 980 post office sites at a cost of Sh920 million. The contract was among 20 cases in a list that was the subject of last Thursdays meeting, hosted by the Head of Public Service, Francis Muthaura, and at which Permanent Secretaries and chief executives of parastatals conducted an open forum, during which details of the contracts were discussed with industry players. One of the issues that came up was whether all the equipment had been supplied as per the contract, in view of the fact that a good number of the post offices are located in places without access to electricity.

But a spokesman for the corporation, Tom Ogutu, told last weeks meeting of Permanent Secretaries and stakeholders that all the equipment had been supplied and was in the custody of the corporation. He disclosed that so far 585 out of the 980 sites had been rolled out, explaining that the assumption at inception of the project was that the Postal Corporation would use solar power in areas where there was no access to electricity. However, the solar power option, he explained, had turned out to be too expensive.

Critics say that the bandwidth contract was lopsided, as it has tied the Governments hand into paying for bandwidth for all the 980 sites, when only 585 have been connected. But in a telephone conversation with BusinessWeek, a spokesman for Universal Satspace, Abrahan Zivtal, said that contrary to what the critics were saying, the corporation was currently using the full bandwidth spectrum it had paid for. And he maintained that all the equipment in the stores will have been installed by September this year.

"We have made sure that Postal Corporation of Kenya is getting full value for the bandwidth that is being paid for at any one time", he said. He explained that the service his company, in collaboration with local partners, Alldean Satellite Networks, were supplying were shared hub services pointing out that the only equipment they were only hosting a back-up hub for corporation, which was critical for the quality of the firms network, in view of its size. On his part, the corporations chief executive, Dan Ameyo, told BusinessWeek that the project had given the State-owned firm a versatile platform that allowed them to launch many services from the more than 500 post offices so far covered.

He explained that since it was launched, the project had made it possible for the general public to access the internet at a low and affordable cost of Sh1 per minute, adding that plans were at an advanced stage to introduce a money transfer service, and many more applications such as pre-paid services for VoIP (voice over internet protocol) on the network. According to available documents, the genesis of the project would appear to have been an invitation which the corporation extended to Spacenet Inc in 2000, to investigate the possibility of designing, financing and providing a 10-year broadband data network and rural internet service. During the negotiations, Spacenet came in with Universal Statspace as joint venture partners, to provide bandwidth and network management services.

In early 2002, the then Ministry of Transport and Communications, the parent ministry of the Postal Corporation, signed contracts with Spacenet and Universal Statspace for the project. Whereas the contract for supply and installation was signed with Spacenet Inc, the contract for supply of bandwidth and network management went to Universal Statspace. And to secure its interest, the Government entered into an on-lending agreement with Postal Corporation for a period of 13 years.