Monday, December 15, 2008



December 14 2008

About 2,000 Government vehicles earmarked for sale under a reformed transport system are being sold off at incredibly low prices, the Nation can reveal.
One the cars is said to have been sold for as little as Sh500. Most of the vehicles already sold were bought by well-connected individuals and companies through questionable deals.

The cars are being auctioned in line with a transport policy announced by the then Finance minister Amos Kimunya during the 2006 Budget speech.

The sale was expected to save the Treasury about Sh1.3 billion per year in fuel and maintenance costs.

Valuation experts

But the Nation, through interviews with private valuation experts, has established that the vehicles were grossly undervalued before being sold.

The valuers described the prices as a “major rip-off”, which “should not be allowed to continue”.

A Range Rover vehicle bought at Sh10 million in 2003 has been put up for sale at Sh1.5 million. Independent valuers said it should sell for at least Sh5 million due to depreciation.

The car had no mechanical problems and is only described as “excess” by the report of the board of survey on stores, which made the valuations.

Another vehicle, a Toyota Land Cruiser bought in 2002 at Sh10 million is being sold at Sh1 million, although the private valuers said it was worth Sh4.2 million.

Another car, a Sh6 million Land Cruiser bought in 2004, is set to be sold for Sh600,000 in the open tender advertised in May.

Yet another car of similar make bought in 2000 at Sh6 million has been earmarked for sale at Sh1 million. The three vehicles were in good condition and were only being sold to comply with the Kimunya directive.

Sources said at least 1,210 cars have been put up for sale by public auction, with many of them being grossly undervalued “because the bosses were selling to themselves”.

Valuers told the Nation that there was no way the vehicles’ value would have depreciated at such high rates in such a short time.

Most of the vehicles had been undervalued by up to four times, they said. One of the valuers, who asked not to be named, said the vehicles had been stored in good condition since they were surrendered by various ministries in 2006.

He said the public was losing millions of shillings in the auctions because of the poor valuation. He said professional valuers could have given more realistic estimates had they been asked to do the job. But a Government official involved in the sale said large vehicles often lose a quarter of their value immediately they leave showrooms, due to public perception that they cannot be afforded by those seeking to buy used cars.

He said some vehicles could be sold above the valued prices but not lower. Efforts by the Nation to get a comment from senior Treasury officials last week proved futile. Public relations officer Edward Olem repeatedly promised to get back to our reporters, but failed to do so.

The office of the Financial Secretary, Mr Mutua Kilaka, referred the Nation to the head of the task force on transport, Mr Donald Kibera, who was said to be out of office and could not return our calls.

A senior official at the task force, Ms Sheila Kiambati, said she was new at the department and could, therefore, not respond to the questions.

Under the Transport Policy for the Public Service, use of Government vehicles as the primary mode of transport for civil servants was abolished.
Instead, civil servants were to be given a monthly transport allowance reflected on their pay slips. The policy compelled various government departments to return numerous vehicles to the Treasury.

The Nation obtained a list showing that the vehicles sold in the third round of the auctions, which ended last month, were going at prices as low as Sh500 for a car bought in 1981.

Some 263 vehicles were advertised for sale. At least 11, which had been bought at prices beyond Sh5 million, were all sold for less than Sh1.5 million each.

The Nation further learnt that the board that was assessing the prices was, in fact, aware that the prices were below their expected levels.
The board reduced the prices on claims that most people were not willing to buy the big vehicles, which consume more fuel and are more expensive to maintain.

The first round of sale was in March, last year, when 112 vehicles were advertised though only 70 were sold. Four months later, some 363 were advertised but only 211 were sold. A third sale was advertised in June when 263 vehicles were to be sold. It is was not clear how many of the cars were eventually sold.

Some 560 other vehicles were identified and put up for sale in various districts in June and a further 164 last month in the regions. The figures from these auctions are yet to be compiled. Vehicles that were identified for disposal are parked at the Industrial Area store of the Public Works Ministry.

However, all the sale agreements are transacted at the Treasury by a task force specifically formed to implement the policy. The team is headed by Mr Kibera.
It is expected that another tender will be put up in January. The Nation also learnt that the exercise had, sometimes, been marked by confusion.

In some cases, two applicants could pay and get allocated one vehicle, meaning one of the bidders could miss out. In some cases, people who won bids could withdraw their interest only for them to return later and stake a claim to their successful bids after the second bidders had been awarded the tenders.

Appeals resulting from such cases are currently being processed. The latest appeals meeting was held by the Public Procurement Administrative Review Board last Thursday.Currently, the Treasury can only account for 1,610 cars although it had been estimated that 2,796 vehicles would be returned after the new policy took effect.

It is also not clear how many vehicles had been given out to other departments. Some departments like the police and the military were spared the new vehicle-surrender policy. Others exempted included the Electoral Commission of Kenya, State House, the Judiciary and the Public Service Commission.

The policy was seen as the most serious attempt to tackle the problem of high costs of transportation in the civil service.

At the time, a Cabinet minister was supposed to have two vehicles at his or her disposal. But holders of influential portfolios such as Internal Security, Finance and Justice and Constitutional Affairs had fleets, which they were asked to surrender. The policy also reduced the number of drivers working in the public service. Ironically, the Government has been recruiting drivers in some of the ministries since the policy came up.