The government has signed a Ksh7 billion loan agreement with the Exim Bank of China to fund project, to be implemented by independent international geological consultancy firms.
The government-to-government framework agreement initiated in July this year has received backing from the Attorney General’s office, which has given its final legal opinion.
Kazungu said on Thursday that the ministry is finalizing arrangements to sign off with the independent geological consultancy firm —International Geoscience Services of the UK and Paterson, Grant & Watson Limited of Canada, to provide consultancy in the project.
The contractor — Geological Exploration Technology Institute (GETI) — is expected to start mobilizing in January and early February. This is the consortium of consultancy firms that won the international consultancy tender for the project last year.
“The project has received final Kenya Government sign off. Official launch of the project is expected in early March 2018 according to the project roadmap,” Kazungu said, noting that the government is involving international consultants to ensure “the project is conducted based on global best practice.”
“A select team of 16 Kenyan top geologists will be drafted to be part of the project for monitoring and evaluation and to benefit from technology transfer,” he said.
With the latest developments, Kenya has now inched closer to the much awaited survey which suffered a setback last year, after the government revised its plans to fund the project. The National Treasury withdrew Ksh3 billion it had allocated for the survey in the last financial year, and asked the ministry to outsource funds for the programme.
The changes were in a Supplementary Budget which affected about 35 state departments, as the Treasury sought to scale down government expenditure by about Ksh181 billion. The mini budget, tabled in the National Assembly in December 2016, sought to cut development spend by Sh213 billion and increase recurrent expenditure by Sh32 billion.
Treasury directed the Mining ministry to consider a previous Memorandum of Understanding with GETI, to carry out the survey with a grant from the Chinese government. The Mou signed on August 13, 2013, spearheaded by the then CS Najib Balala and GETI president Jia Xuetian, did not materialise as the project failed to take off because of lack of funds.
GETI was to undertake an aerial survey for between 24 and 36 months at an estimated cost of $70 million (Sh7.2 billion). The process has dragged for over six years.
The contracting of a foreign company was early this year questioned. The Parliamentary Budget and Appropriations Committee had suggested that the survey be conducted by Kenyan geologists to secure the country.
This was based on an argument that funding and conducting of the survey by a foreign entity could compromise Kenya’s minerals, as data will be obtained by foreigners. The tendering was also questioned but the CS has defended the process saying it was above board.
Kazungu said the government sent a team to China to cross-examine the company and had given a positive report. It included Members of Parliament from the committee on environment and natural resources, dean of geological department at the University of Nairobi, ministry officials, legal team from Attorney General’s office and Treasury.
“The team went to do due diligence on legal, technical and financial capacity. After the report, Treasury went ahead and engaged with them. If anyone wants to know anything about this processes just ask. We have the details,” Kazungu said.
If successfully implemented, it will act as a catalyst for attracting investors to the country, a move that will boost mineral earnings and contribution to the Gross Domestic Product.
“We are very excited about the survey. It will enable us know which minerals are found where and the volumes. This will make our mining jurisdiction attractive to foreign investors and attract capital inflows,” Kazungu said.
Kenya is currently working with consulting firm —McKinsey on a 20-year mining plan that has already highlighted a potential of $ 62.4 billion ( about Ksh6.465 trillion ) mining revenues, contributing up to 10 per cent of the GDP by 2030, from the current paltry one per cent.
The East Africa economic power house has significant deposits of gold, coal, titanium, copper and a host of other minerals that could change the country’s fortunes, reducing over reliance on agriculture and tourism.