Lebanese firm Zakhem International has been awarded the contract to build a $500-million petroleum pipeline in Kenya.

The company overcame stiff competition from seven shortlisted firms and scored 95.5% in the technical and financial evaluation of the bids.

Kenya Pipeline Company (KPC) says Zakhem demonstrated that it had the necessary capability, experience and resources to undertake the project and also presented the lowest bid of $484.5-million.

Despite winning the contract for the construction of the 450 km pipeline from Mombasa to Nairobi, the company will have to wait for the conclusion of a court challenge to the manner in which KPC handled the tender process.

Rich Production has sued KPC, claiming it was locked out of the tender process despite having the technical ability to handle the project.

Besides the court action by Rich Production, which KPC has dismissed as a briefcase firm, one of the losing bidder has filed an application at the Public Procurement Administrative Oversight Review Board challenging the tender.

However, KPC maintains the procurement process was above board and that Zakhem emerged the winner on all parameters. The company was also involved in the construction of the existing line, which KPC wants to replace after coming to the end of its life span.

“Zakhem was involved in the construction of the current pipeline, which was given a life span of 25 years, yet it has served for over 36 years,” says the State-owned company.

The existing line is unable to meet rising demand for petroleum products, despite the Kenya government having invested $92.4-million in 2008 to increase its flow rate from 440 m3/h to 880 m3/h. The line’s inefficiencies have forced oil companies to largely depend on road transport to move products from the Port of Mombasa to other parts of the country.

China Petroleum Engineering Construction’s bid was ranked the second best, with a score of 89.1%, while Sinopec International Petroleum Service came third, with a score of 84.5%.

China Wuyi Company was fourth, with 83.1%, Denny NS was fifth, with 82%, Punj Lloyd, sixth, with 81.1%, and Saipem Business unit Engineering Construction, seventh, with 73.4%.

Zakhem is a major international construction, engineering and investment group of companies founded in Lebanon in 1963 to meet the construction needs of the Middle East and Africa.

Zakhem, which is a family-owned business, has served the petrochemicals industry and, through its worldwide branches, has established an international reputation in the fields of engineering and construction of onshore pipelines, storage tank farms, gathering and pumping stations, refineries and industrial plants.
The company has diversified into other fields of construction and broadened its range of services to include water supply systems, sewage and wastewater schemes, water pipelines, roads, highways, buildings, housing estates, hospitals, marina works, hotels and leisure facilities.