Locals beat Chinese firms in Sh8.9bn last mile power deals


The Energy and Petroleum Regulatory Authority must undertake updated power supply and demand projections. 

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Kenyan firms beat their Chinese counterparts in the fight for billions of shillings under the Last Mile power connectivity, bucking a trend where companies from the Asian economy have dominated local contracts.

An analysis of data shows that Kenyan firms took up Sh4.79 billion worth of the contracts signed last week, nearly double the Sh2.5 billion that went to the Chinese.

The Last Mile Connectivity was rolled out in 2015 as the then Jubilee government, backed by development partners, sought to connect homes to electricity at a subsidised rate of Sh15,000.

Chinese firms have in the past decade flooded the country targeting high-value infrastructure projects, rattling local firms that have been relegated to smaller projects in sectors such as roads, rail and building construction.

Kenya Power, the State agency contracting the firms for the project, declined to comment on the matter for this story.

A letter from the Ministry of Energy with details of contracts that were signed last week shows that Kenyan firms took up the three biggest contracts for the fourth phase of the Last Mile project.

M/S Meru Wood Industries took the biggest contract worth Sh627.6 million to connect 16,236 homes across four counties followed by a Sh620.07 million deal that went to M/S Master Power Systems and Philafe Engineering to light up 4,683 homes in West Pokot.

The biggest deal for a Chinese firm in the project is a Sh367.8 million contract to M/S Powerchina Hubei Engineering to connect 7,694 homes in Kitui followed by a Sh354.04 million deal for M/S Shine Technologies Consortium to connect 14,582 homes in Bungoma, Uasin Gishu, Trans Nzoia and West Pokot counties.

Kenyan firms bagged 11 contracts out of the 26 signed for the project while 10 went to contractors from the Asian economy.

Firms jointly owned by Kenyans and Chinese took two valued at Sh811.03 million while Indian-owned firms got three contracts worth Sh797.7 million.

Chinese firms have since 2015 raked up the bigger chunk of the deals in the Last Mile electricity project, mirroring dominance in other sectors of the Kenyan economy.

Chinese companies started making inroads into Kenya with the deal to build the Nairobi-Thika highway and have since delivered the standard gauge railways and the Nairobi Expressway.

Their increased involvement has come at the expense of Kenyan companies, triggering uproar from contractors.

In 2022, Parliament opened a probe to unmask local directors or beneficiaries of Chinese firms undertaking multi-billion-shilling projects since 2013.

However, the outcome of the investigation was not disclosed even as claims remain rife that most of these Chinese firms bagging the big deals have local directors.

The Last Mile project entered the fourth phase last week with the signing of the deals at State House, with an estimated 280,000 homes set to be connected.

Under the scheme, homes are connected to the national grid for as low as Sh15,000 with the government and development partners paying the vast chunk of the connection costs.

The big number of the Chinese firms winning big infrastructural deals has generated a lot of heat with lawmakers proposing changes to the law to halt their foray.

In October last year, Parliament handed the Chinese firms a big lift after it rejected proposed changes that sought to limit the participation of foreign firms in the projects.

Lawmakers rejected the Public Procurement and Asset Disposal (Amendment) Bill of 2023 that sought to raise the limit for foreign firms bidding for contracts from Sh500 million to Sh20 billion.

The Bill that was aimed at protecting local contractors was shot down because few Kenyan-owned firms could afford to deliver high-value contracts.

Rigathi Gachagua, the Deputy President, four years ago, while serving as an MP, sponsored a Bill that sought to only allow foreign firms to bid for contracts of Sh1 billion and above.

But the Bill was rejected, leaving local contractors with the huge task of competing with Chinese firms for the big-ticket contracts.

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