Time flies with great content! Renew in to keep enjoying all our premium content.
Prime
Inside the order for KenGen to restart Sh2.5bn carbon credits tender
A geothermal well at Kenya Electricity Generating Company PLC’s (KenGen) Olkaria site undergoes discharge testing in preparation for electricity generation on February 21, 2025.
The Kenya Electricity Generating Company (KenGen) has been ordered to restart the tender process for its 4.62 million carbon credits, which are worth Sh2.5 billion ($19.6 million), after the procurement watchdog found irregularities in the bidding process.
The Public Procurement Review Board (PPRB) nullified the firm’s decision to award the tender to a joint venture of Munja Trading Limited and Marwil Energy Holding AS, the third time that KenGen’s carbon credit sales have faced procurement challenges.
Carbon credits are permits that allow firms to produce a certain amount of carbon emissions. Organisations that run environmental conservation efforts that remove carbon from the atmosphere or prevent carbon emissions can sell their credits to those that generate emissions.
In its ruling, PPRB found ambiguous clauses in tender documents, unfair disqualification of bidders and a non-standard two-stage evaluation process.
The controversy centred on the disqualification of Sintmond Group Ltd, a Nairobi-based energy firm that had previously worked with KenGen. The company’s bid was rejected for not submitting client references or evidence of past carbon credit transfers.
However, PPRB chairperson Jessica M’mbetsa ruled the requirement was not mandatory as the documents used “and/or” rather than strict “and” wording.
“Disqualifying Sintmond for non-compliance with an optional requirement was unfair,” the board stated, adding that KenGen failed to properly evaluate bids under Section 80(2) of the procurement laws.
“If the intent was to make it conjunctive, the requirement would have been drafted with the word ‘and’ only, thereby compelling bidders to provide both client references and transaction certificates without exception,” said PPRB.
In its defence, KenGen argued that Sintmond’s submission showed “insider dealing” rather than legitimate client transactions.
The PPRB also faulted the unusual two-stage evaluation (preliminary and financial only), warning that this “risks inadequate vetting of bidders’ competence, particularly where public funds are involved”.
The other interested bidder was Kyoto Network Limited. Both Kyoto and Sintmond were disqualified at the preliminary stage. Kyoto Network could not be reached for comment.
Only the Munja-Marwil joint venture proceeded to the financial evaluation stage. It had quoted a price of $19.6 million.
Carbon credits, also known as carbon offsets, allow owners to emit a certain amount of carbon dioxide or other greenhouse gases. One credit permits the emission of one tonne of carbon dioxide or the equivalent in other greenhouse gases.
KenGen has 4.62 million carbon credits from its six projects —Olkaria II geothermal expansion project, redevelopment of Tana Hydro Power Station project, optimisation of Kiambere Hydro Power Project, Olkaria IV Geothermal Project, Olkaria I Units 4 & 5 Geothermal Project, and Ngong Wind.
The six are classified as clean development mechanism projects under the Kyoto Protocol, which sets emission reduction targets for countries and facilitates technological and financial transfers to nations to support climate change mitigation and adaptation initiatives.
Kenya ranks among Africa’s top carbon credit producers, with KenGen’s geothermal projects being particularly attractive to international buyers seeking high-quality offsets.
