Russian firm sues KenGen in Sh14.4bn tender dispute
A technician inspects a geothermal well. The High Court has stopped KenGen from signing a contract with RentCo East Africa for supply of geothermal units at Ol Karia until a tender dispute is determined. PHOTO | FILE
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OJSC Power Machines claims power generator awarded supply tender despite being aware rival firm did not meet requirements.
Russian firm OJSC Power Machines has accused electricity generator KenGen of favouring a rival company competing for a Sh14.4 billion tender for the supply of geothermal power generation units to be used in the Ol Karia V plant.
The firm has sued KenGen for awarding the multibillion-shilling deal to RentCo East Africa, which it says did not meet the tender requirements with regard to years of operation.
It holds the KenGen concealed the fact despite finding out the information earlier this year during separate tender proceedings.
Justice George Odunga last Thursday issued an order stopping KenGen from signing a contract with RentCo’s consortium until the suit is determined. OJSC’s consortium holds that RentCo was incorporated in June 2012 hence did not meet the three years’ experience requirement to win the tender.
RentCo partnered with IT firms Toshiba and Lantech in its bid while OJSC presented a combined bid with TransCentury and Civicon Limited.
OJSC’s petition at the Public Procurement Administrative Review Board (PPARB) was dismissed. It says it discovered the alleged irregularities after the appeal was determined.
“RentCo would not have been in a position to attach most recent three-year audited financial statements having only been incorporated on June 6, 2012.
“KenGen was well aware of this fact having previously, by a letter dated 12th June 2015, disqualified RentCo with regard to Expression of Interest for Consultancy Services for Rehabilitation of Ol Karia 1,” OJSC’s lawyer Philip Nyachoti says in court papers.
The deal was to see the winning bidder lease and install geothermal power generation units at Ol Karia V. KenGen expects to earn at least Sh823 million annually in revenue from electricity generated at the plant.
The winning firm is also expected to maintain the power generation units.
KenGen and the PPARB are yet to respond to the suit. Justice Odunga granted the two firms until October 19 to file their replies. RentCo’s consortium has been enjoined as an interested party.
The OJSC consortium holds that KenGen’s move was aimed at hoodwinking the PPARB into upholding the electricity generation company’s decision to award RentCo and Toshiba the tender.
The group adds that the PPARB declined to consider allegations of favouritism it had raised against KenGen.
It now wants the High Court to reverse the PPARB’s decision on grounds that KenGen’s alleged deceit invalidates the tender award to RentCo.
“The PPARB erred in fact and in law in failing to review not only the allegations made in the request for review before it, but also to review the entire procurement with regard to the tender,” the OJSC consortium holds.
Mr Nyachoti adds that KenGen flouted procurement rules in failing to award scores for the financial and technical evaluation stages. He has faulted the PPARB for failing to take into account the alleged irregularity when ruling on the matter.
The Ol karia V plant is planned to kick off before the end of the year. It is part of KenGen’s plan to add 3,000 megawatts to the national grid by 2018. Ol Karia V will inject 140 megawatts to the national grid.
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