The Kenya Revenue Authority (KRA) has elicited concerns after seeking a new supplier of excise duty stamps.
The move may lead to taxpayers losing billions already billed in the existing system. The Public Investments Committee on Commercial Affairs and Energy of the National Assembly chaired by Pokot South MP David Pkosing is probing the move.
The MPs want the taxman to explain why it has floated a new tender for the costly stamps at a time Swiss firm SICPA, which has provided the service for the past eight years, wants to offer it at half the price from next financial year.
KRA floated the tender in April in an Expression of Interest (EOI), hence the probe by the oversight committee.
The big question by the lawmakers is why the new bid yet SICPA has offered to reduce the price and handover the existing system to KRA for use by the taxman as well as Kebs and Anti-Counterfeit Authority.
“Why did KRA do that, did they find a gap in your system and therefore you are doing it? Did you have any assessment, my understanding is that you evaluate a system for the 10-year period, do the assessment, and say these are the reasons we are going for a new system,” Pkosing said.
The Excisable Goods Management System (EGMS) was set up in 2015.
Kenyans have been billed in excess of Sh23 billion to run the system.
“People might want to kick off SICPA and get an opportunity to rip off Kenyans three times. We don’t know, so we need a comparison so that the people of Kenya can make informed decisions,” Pkosing added.
“How can you own something that you can’t be able to use tomorrow? If you leave it with me how can I be able to operate it? If they will not renew it, what purpose will the machine offer?” Laikipia East MP Mwangi Kiunjuri asked.
Kasarani MP Ronald Karauri said, “Does SICPA have an unfair advantage on this tender because if they hand over the system to KRA will another company be able to manage this system? It means that SICPA has held KRA hostage to award them the tender moving forward.”
SICPA Chief Commercial Officer Gianni Santoro told MPs that they agreed with KRA on a one-year maintenance contract after the lapse of the current arrangement.
He said an amendment was done in 2021 which provided that it would sell the duty stamps to KRA at half the current price.
“Following the amendments to the 2015 contract, we have a clause on the transfer of equipment and the system to the KRA,” he said.
“The addendum provides for the conclusion of a maintenance contract between KRA and Sicpa following the transfer of ownership of the system to KRA to ensure continuity of the system.”
Santoro told MPs that after the lapse of the current contract – the one on maintenance, KRA would be free to end the same and search for a new supplier.
It emerged that KRA owes SICPA about Sh5 billion for stamps delivered. The entity had done more than 14 million stamps as of May 2023.
The committee further wondered why the rush in the face of Sicpa further agreeing to execute the terms of the contract in Kenya shillings. The initial contract said the transactions would be in Euros.
SICPA provides excisable stamps on a range of consumer products more so soft drinks such as soda, bottled water, and fresh juices as well as beer, spirits, cosmetics and cigarettes.
“We are willing to hand over the system to KRA. But in order to ensure the system is highly secure, it needs to be serviced and run by Sicpa. Otherwise, the system will become useless and insecure,” Santoro said.
The EGMS programme is currently installed in 124 lines which is aimed at ensuring excisable products are accounted for and traced through secure marks.
