Companies

Sh1bn KPC tender lawsuit dismissed

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Kenya Pipeline Company [KPC] petroleum storage facility in Industrial area, Nairobi in this photo taken on January 22, 2021. PHOTO | JEFF ANGOTE | NMG

The High Court has dismissed a case challenging an Sh1.08 billion tender for the construction of a line to connect Kenya Pipeline Company (KPC) to the Kenya Petroleum Refineries Ltd at Changamwe in Mombasa County.

Justice Anthony Ndung’u dismissed the case filed by H Young & Company (East Africa) Ltd for lack of merit.

The judge said the company failed to point out how the Public Procurement Administrative Review Board erred by upholding the contract granted to Comacon Ltd in a joint venture with Gulf Energy Ltd.

The judge said the board cannot be faulted for reaching the decision it did after according all the parties a hearing and correctly applying the law of evidence.

“It is clear from the foregoing that the board properly addressed itself to the evidence availed to it, analysed it, and reached a finding it did. This court, cannot sit on appeal on the issue to determine the sufficiency of the evidence or otherwise,” he said.

Evidence presented in court showed that five companies participated in the tender and H Young & Company (East Africa) ltd said it was notified by KPC in February that had attained minimum qualifying marks in its technical proposal and was invited for the opening of the bids.

The company added that it was notified that only one bidder had made it to the financial opening but later in March, the company was informed that KPC had terminated the tender because of a lack of funds.

The tender was later re-advertised and the bids were opened on April 1 and Comacon ltd JV Gulf Energy ltd won the tender at a cost of Sh1.08 billion.

H Young & Company (East Africa) ltd was not successful in its bid and moved to the review board its case was dismissed because of a lack of evidence in the claims it made. The company then moved to the High Court seeking to stop the implementation of the project and order KPC to re-evaluate its tender.

According to the losing bidder, there were foreign bidders participating in the tender and KPC failed to apply the margin of preference.

The court heard that Gulf Energy is a foreign bidder because it is not registered by National Construction Authority (NCA) and its activities were limited to participating in open tender system business for the importation of oil in Kenya and in retail trading generally.

The bidder questioned how an entity whose main business is oil trading and is not registered with NCA and EPRA acquired construction experience of over five years to be able to provide its share of construction turnover.

Further, the company said the percentage of Kenyan shareholding is the primary factor in determining whether a margin of preference is applicable when domestic and international bidders are vying for the same contract, provided that domestic contractors have attained the minimum technical score.

The review board, however, noted that the application of the margin of preference was dependent on the method of procurement applied by the procuring entity.

KPC defended the process saying it was done in an open and fair manner and the joint venture between Comacon ltd and Gulf Energy was found to be the most responsive and the lowest evaluated bid price.

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