Nairobi County’s e-payment stopped in Sh1.5bn dispute
BUSINESS DAILY By GALGALLO FAYO
Thursday September 4,2013
Nairobi County government has been stopped from awarding the e-payment system tender until the conclusion of a dispute where a technology firm is seeking Sh1.5 billion for breach of contract.
Justice Jonathan Havelock directed the county government to halt the tendering process and await the determination of the suit filed by Hausraum Limited whose hearing is set for October 15.
The company claims that the county terminated the implementation of an e-payment system in July without giving a six-month notice stipulated in the contract signed with the defunct City Council of Nairobi.
The county terminated the contract dated August last year on July 29 and on September 17 advertised the tender afresh.
“The status quo in the meantime will be maintained and that means that the defendant will not progress matter towards the tender and acceptance of new contracts of the nature that the plaintiff has placed before this court until the plaintiff application and/or preliminary objection is heard and determined,” said Mr Justice Havelock.
The firm says it had signed agreements with third parties including Essar, Family Bank, Co-operative Bank, Barclays Bank and Equity Bank exposing it to possible legal suits.
Hausraum is seeking Sh840 million, being two per cent of the anticipated revenue collection until 2015 when the contract would have lapsed, and Sh100 million for the opportunity lost. It further seeks Sh200 million as compensation for damaged reputation and Sh20.3 million for operational expenses.
READ: Firm seeks Sh1.5bn compensation from Nairobi County
The company alleges that it is in the process of rolling out the system which would increase the revenue collection from the current Sh7 billion to Sh14 billion annually.
The firm was awarded the tender in March 2011 to customise the payment system. The agreement was to lapse in 2015.
The payment of all bills and fees such as parking and water charges, among others, to the council was to be done electronically once the technology was fully operational. The system was to utilise the mobile money payment system.
Hausraum claims it carried out a three-month pilot test on Koinange Street in Nairobi in January where Essar and Equity confirmed the system was operational and functional.
The county in its response and in preliminary objection has asked the court to dismiss the suit arguing that the court lacks jurisdiction since the contract stipulates all disputes to be referred to an arbitrator.
Nairobi County says it had entered into an agreement with the company on development of electronic bill presentment and payment (EBPP) in 2011. The first phase of the project constituted customising of the payments system and the subsequent phases was implementation.
“Whereas the only phase of the EBPP platform that the applicant executed at the respondent was the customising phase of the project and for which the contractual sum was Sh11.8 million, the applicant has to date drawn from the applicant Sh93.4 million,” says county ICT director Benter Ogot.
The official adds that the firm did not train the county workers as agreed and provide enough phones for piloting phase launched last year as agreed upon.
Mr Ogot also claims that the firm received Sh40 million to implement the project in August last year but had not completed the pilot phase.