Millions of Kenyans across their country awoke today without access to cheap and easy communication when the company providing satellite bandwidth to more than 500 post offices cut off their services due to non-payment.

Universal Satspace, based in Israel, last week sent a fax to Kenya's acting postmaster-general, Ken Oluoch, informing him of the suspension. More than $12.4m is owed to the service provider.

Oluoch said yesterday it was a government matter, and that the contract had not been signed with Postal Corporation Kenya (PCK), but with the ministry responsible for postal services.

Satspace has now filed a claim in London, through its attorneys Mills & Reeve, claiming the money. It says Kenya's government has defaulted on payment since May last year.

According to Nairobi newspaper The Nation, the Satspace project is among 18 contracts the Kenyan government stopped paying for at the height of the Anglo Leasing scandal in August last year.

The scandal was brought to light by former secretary for governance and ethics, John Githongo, who had previously headed Transparency International in Kenya. He resigned in February last year after he uncovered massive looting and grand corruption involving top government officials.

After five quarterly instalments of $1.12m were missed, the whole amount due to Satspace plus the interest became due. According to a source close to the project, the entire contracting process with the Kenyan government was clean and "there was nothing untoward about it. "The government is simply using it as an excuse not to honour its commitments." The Kenyan government signed the contract in July 2002 to modernise and upgrade the country's postal network -- making its system a model for the continent.

The contract had two main elements: first, the provision of bandwidth and network management to link all the PCK post offices to include the internet telephone and fax system which would be an essential management tool for the running of the post office network. It also enabled the provision of cheaper fax and high-speed Internet access than what was offered at Internet cafes.

In April 2004, the communication commission of Kenya said of the project's final inception report: "This is a government project, with ministries of transport and communications, and finance being the two ministries involved."

Universal Satspace CEO Abraham Ziv-Tal said yesterday from Tel-Aviv that the Kenyan government was using the "corruption" angle as an excuse. "It simply does not suit them to pay. Our system worked perfectly for the PCK for two years.

"The tendering and contracting for this project was exemplary. Now people are going to suffer because as of midnight, they will no longer have a service they have got used to and come to expect as their right.

"I hope that we will win our claim when it comes to court. But of course, nothing is assured. It will be a tragedy for Kenya in the long term if we do not win, because nobody will then be willing to enter into any sort of contractual agreement with the Kenyan government," he said.

The Satspace dispute is not the only contractual matter Kenya faces. Earlier this month the government, which has been defending a lawsuit in the Hague which involves, as The Nation describes, another Anglo Leasing-like project, lost a court application to stop an order for seizure of the Kenyan embassy in the Netherlands, if it did not make good on a military contract worth $37,2m.

The Nation ran a feature two weeks ago outlining a new initiative planned by the post office, in which it had teamed up with Afripayments, a local company with international partners, to launch a new service for rapid money transfers.

The article says: "To PCK, the new service means that it has now found a more profitable use for its two-year-old countrywide Vsat (very small aperture terminals) based internet link, a service that it is providing almost as a giveaway."

Business Day

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