Corporate News
Loser moves to stop award of emergency power tender
An official with Kenya Power and Lighting Company takes notes at a sub-station in Nairobi. Energy Trading Group FZC wants KPLC stopped from executing the tender for the establishment of one of the three 60-80 MW power plants it awarded a fortnight ago. File
Posted Sunday, January 24 2010 at 16:57
Though thermal power is cheaper to develop, energy economists say it ultimately gets expensive in the long run when its impact on power bills inflation and environmental damage it causes are factored in.
Thermal power mainly ramps up consumer prices through fuel cost charges -- a varying item on the power bills --that is linked to the amount of power it contributes to the national grid.
The Request for Proposals, says Energy Trading, was clear that the bids were for development of the power plants operated with Heavy Fuel Oil, but instead the Procuring Entity has proceeded to award the tender to a bidder whose submission would appear to be based on Gas Oil, rather than Heavy Fuel Oil.
“As such, the Procuring Entity has acted in breach of Sections 31 and 34 of the Public Procurement and Disposal Act, “ it said.
The firm is seeking orders before the board to have the decision by KPLC set aside and nullified and instead re-evaluate the bids.
In an affidavit, Varinder Puri, the Director in charge of Finance, Mergers and Acquisitions, at Energy Trading says evaluation of the price proposals has been undertaken on the basis of an unequal and skewed formula that makes it impossible to evaluate the bids objectively.
Mr Puri says the successful bidder, Triumph, quoted its Specific Fuel Consumption figures for its proposed plant at 0.191 kg/kWh, whilst his firm’s figures was 0.211 kg/kWh.
“Our estimation is that the fuel oil being proposed by Triumph would have been of a calorific value of approximately 42,700 kJ/kg as opposed to the Applicant’s bid which was based on a minimum calorific value of 40,585 kj/kg” .
As a result, says he says, based on a price differential of $200/MT between the gas oil offered by Triumph and the HFO by Energy Trading shows the plant by the former would cost the Kenyan taxpayers about Sh14 billion over and above the latter’s fee in absolute terms, or Sh8 billion if a discount factor of 12 per cent is applied over the period of 20 year span of the project.
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