Kenya Power 17-minute system hitch costs Rubis Sh8.7bn deal


Customer attendant at Rubis Petroleum Station on Koinange Street Nairobi. PHOTO | DENNIS ONSONGO | NMG

A procurement tribunal has nullified a Sh8.7 billion fuel supply deal won by French oil marketer Rubis Energy following a 17-minute system hitch by Kenya Power that locked out one of the bidders from the lucrative tender.

The contract would have seen Rubis Energy Kenya Plc supply at least 53 million litres of diesel to 30 off-grid power stations in northern Kenya for two years.

The Public Procurement Administrative Review Board (PPARB), which adjudicates tender disputes, has also ordered Kenya Power to re-advertise and commence a new procurement process for the tender.

The board found that Kenya Power used an electronic procurement system that locked out Galana Oil Kenya Ltd a few minutes before the deadline for submission of the tender documents.

According to the judgement, the deadline for submission of the tender documents was November 23, 2022, at 10.00am.

But Galana was unable to access KPLC’s e-procurement system on the said date from 9.42 am to 9.59 am.

Kenya Power was unable to explain the technical failure of the electronic procurement system known as the “KPLC SAP tendering portal”.

“No explanation has been offered as to why Galana Oil Kenya was able to access the KPLC’s e-procurement system on November 22 but was unable to access the same on November 23 between 9.42 am and 9.59 am. This in our view was unfair to Galana,” ruled the board.

PPARB said Kenya Power was under obligation to ensure that its e-procurement system was open and accessible to all prospective tenderers before the tender submission deadline.

The winner was required to supply and deliver at least 2,216,000 litres of low-Sulphur diesel monthly to the northern Kenya stations.

At the current fuel prices, the value of the tender is estimated to be in excess of Sh8.7 billion as a litre of diesel is retailing between Sh165 and Sh170 in the areas where the power stations are located.

The tender was challenged a day before Rubis was officially notified of the win on December 2, 2022.

At the time the award of the tender was challenged, Rubis was preparing to submit a performance bond security of Sh120 million to the utility firm as required by the tender documents.

Rubis has in the recent past increased its presence and retail network across the country with over 200 stations after it acquired the assets owned and operated by KenolKobil PLC and Gulf Energy Holdings.

Apart from Galana and Rubis, other companies eyeing the contract and which submitted their tender documents in the e-procurement system include East African Gasoil Limited, Oryx Energies Kenya Ltd, Nyumba Itu Energy and Hass Energy.

The low Sulphur diesel was to be delivered at KPLC off-power stations in Mandera, Marsabit, Habaswein, Merti, Baragoi, Wajir, Lodwar, Maikona, Khorodile, Eldas, Lokiriama, Moyale, Kakuma, Kotulo, Elwak and Lokichoggio.

Other power stations are Kamoliban, Takaba, Rhamu, Banissa, Mfangano Daadab, Laisamis, Kiunga, Hulugho, Lokori, North Horr, Lokitaung, Faza Island and Sololo.

Chaired by Faith Waigwa, the board further found that KPLC breached provisions of Section 168 of the Public Procurement and Asset Disposal Act by issuing the bidders with letters for notification of intention to award the tender on December 2, 2022, when the dispute lodged by Galana was pending determination.

The law states that once a request for review has been filed, the procuring entity should immediately suspend the procurement proceedings.

In the instant case, Kenya Power issued the letters for notification of the award of the tender on December 2 a day after being informed of the request for review filed by Galana.

The board said the letters are null and void.

While ordering for a fresh procurement process, the board noted that granting an order for KPLC to allow Galana to submit its tender would go against the principle of competitiveness in public procurement as the bidder may have leeway to adjust its price schedule and tender sum if aware of the prices quoted by the other bidders.

This is because the KPLC confirmed to the board that the other five tenders were opened in the presence of the other tenderers’ representatives.

“This means there is a possibility of the tender sum provided for by the five tenderers being in the public domain and being known to Galana,” said the board.

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Note: The results are not exact but very close to the actual.