Kenya Power flouted own rules in smart meters tender
Kenya Power Managing Director Joseph Siror (left), General Manager Supply Chain and Logistics Dr John Ngeno and Director-General of the Public Procurement Regulatory Authority (PPRA) Patrick Wanjuki (right) when they appeared before the Senate Energy Committee at Parliament Buildings Nairobi on October 17, 2023. PHOTO | DENNIS ONSONGO | NMG
The procurement watchdog has thrown Kenya Power under the bus over the acquisition of Sh5.43 billion smart meters in a deal that has been blamed for delays in connecting hundreds of thousands of homes and businesses to the national grid.
The Public Procurement and Regulatory Authority (PPRA) says Kenya Power awarded Smart Meters Technology Ltd the multi-billion shilling tender despite failing to deliver 91,000 electricity meters in a previous contract.
Patrick Wanjuki, the PPRA director-general, told Parliament that the utility firm flouted its own tender requirements that stipulated that bidders with more than 50 percent outstanding Kenya Power orders were not eligible for the tender.
Mr Wanjuki told MPs that the award of the tender was to consider timely delivery and satisfactory performance of at least 50 percent delivery on previous orders.
He said Smart Meters Technology Ltd had an order to supply 91,000 smart meters by July 24, 2020, but had not done so by July 2023.
“Based on data sheet ITT 3.7 (2) and ITT 40 (20 (c), bidders with more than 50 percent outstanding Kenya Power orders were not eligible for the tender and award was to take into consideration timely delivery schedules and satisfactory performance of at least 50 percent delivery on previous orders,” Mr Wanjuki told the Senate Committee on Energy.
“However, PPRA noted that M/s Smart Meter was among the bidders awarded the subject tender whereas the firm had an order of 91,000 meters that were due on July 24, 2020 and none had been delivered as evidence in the partially/not delivered purchase order report availed [sic] for review.”
Mr Wanjuki appeared before the committee alongside Kenya Power managing director Joseph Siror to shed light on the procurement of the smart meters tender.
Smart Meters Technology is among four local companies that have been awarded a new lucrative Sh5.4 billion tender to deliver 711,740 meters, raising questions on the legality of the decision because the company was yet to fully deliver meters under the previous contract.
Other firms awarded the new tender are Inhemeter Africa Company Ltd, Yocan Group Ltd, and Magnate Ventures Ltd.
Mr Wanjuki clashed with Dr Siror after the Kenya Power managing director claimed that Smart Meters Technology had fully delivered the 91,000 smart meters before the new bids.
“KPLC responded to the concerns raised by PPRA that contained gross misrepresentation of facts,” Mr Wanjuki said.
“KPLC provided the factual position of the issues raised, including the correct status of delivery on previous contracts with M/s Smart Meters Technology Ltd, which stood at 99.7 percent contrary to PPRA’s assertion and press reports that the company had failed to deliver an order of 91,000 meters awarded three years ago.”
The PPRA opened an inquiry into the smart meter procurement by Kenya Power after it received a complaint by one Benedict Kabugi alleging breaches in the tender.
Mr Kabugi challenged the tender, saying the power utility company irregularly and unlawfully restricted the tender to local assemblers.
He said the tender documents issued after the advertisement in February stated that the eligibility criteria were only for local manufacturing firms.
The criteria, he argued, were allegedly expanded to include local meter assemblers and not manufacturers, which substantially changed the original eligibility criteria.
Mr Wanjuki disputed Dr Siror’s claim, arguing that it assessed the procurement and asset disposal processes by the power utility firm in the financial year 2022/23.
“Kenya Power had planned to spend Sh3.8 billion for the financial year 2022/23 on meters, but, however, ended up spending Sh5.43 billion against the budgeted amount,” Mr Wanjuki told the committee chaired by Nyeri Senator Wahome Wamatinga.
“Based on the information provided, it was PPRA’s observation that Kenya Power would have had a financial advantage and saved on costs of approximately Sh29.8 million had they clustered the individual items as lots and awarded criteria to be the lowest evaluated bidder per lot.”
Mr Wanjuki said although the procurement of smart meters was in the Kenya Power procurement plan, there is no evidence that the board approved the plan.
He said Kenya Power did not publish the notice of the procurement in the Public Procurement Information Portal (PPIP) as required under Presidential Executive Order No.2 of 2018.
The PRRA noted that Kenya Power failed to implement the 30 percent reservation for preference groups as specified in the procurement plan.
“Most of the tenders processed through restricted methods were not supported by the provisions of Section 102 of the Act,” Mr Wanjuki said.
“Some contracts were signed after the commencement and outside the tender validity period specified in the tender documents, contrary to the procurement Act.”
The PPRA said the assessment showed a large number of contract variations and procurement terminations that Mr Wanjuki said were approved without supporting documents.
Kenya Power did not make use of standard tender documents as provided by the PPRA and did not fully customise documents, he told the MPs, adding that a number of State entities disregard PPRA’s directives to stop procurement where tender provisions are flouted.
“We have instances where entities sign contracts despite us writing to stop the procurement. We have no power to stop them,” Mr Wanjuki said.
