The public procurement watchdog has directed Kenya Power to explain why it awarded a new electricity meters supply tender to a firm that failed to fully honour a previous contract three years ago.
The Public Procurement Regulatory Authority (PPRA) in a letter to Kenya Power managing director Joseph Siror pointed out that the firm, Smart Meters Technology Ltd, had an order to supply 91,000 smart meters by July 24, 2020, but had not done so as evidenced by a purchase order report.
Smart Meters Technology is among four local companies that have been awarded a new lucrative Sh5.4 billion tender to deliver 711,740 smart electricity meters—raising questions on the legality of the decision because the company was yet to fully deliver meters from a previous contract by Kenya Power.
“Based on the tender 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,” Patrick Wanjuki, the director-general of PPRA, said in the letter to the Kenya Power boss.
The observation by Mr Wanjuki follows a complaint lodged before the board 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 to interested bidders 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 tender document and the eligibility criteria.
“In addition, the awarded amounts surpassed the allocated budget and the excess amounts were never approved by the board of directors and neither was the procurement plan amended to accommodate the excess amounts which is a breach of Section 53(2 & 8) of the Act,” Mr Kabugi said.
Other firms awarded the tender are Inhemeter Africa Company Ltd., Yocan Group Ltd, and Magnate Ventures Ltd.
“In view of the foregoing, you are required to make further responses to the observations made above, taking into consideration the financial impact in relation to award criteria applied by your entity to enable us to conclude our review,” Mr Wanjuki said.
The board said Kenya Power should respond by October 4.
Smart Meter Technology was awarded two lots, one for Sh1.6 billion and another for Sh687 million.
The regulator further pointed out that Kenya Power would have saved costs had it clustered the individual items as lots and awarded the lowest evaluated bidder per lot.
The watchdog has also questioned how Kenya Power decided to purchase meters for two financial years under an annual procurement plan and one-year financial budget.
“A review of your procurement plan, however, does not demonstrate whether the subject procurement was planned as a multiyear procurement as provided under section 53 of the Act. Therefore, the justification given for planning to procure meters for two financial years under an annual procurement plan and one-year financial budget contradicts the provisions of the procurement law,” the PPRA said in the letter.
The power utility firm had defended itself saying that by the end of April this year, there was a backlog of 50,000 meters for new connections and replacements and that the backlog was growing by the day.
According to Kenya Power, 50,000 meters are required by critical and essential providers such as hospitals, health centres, dispensaries and schools, government installations, domestic consumers, and companies and who have paid for the meters.
Kenya Power is betting on smart meters to grow its revenue by replacing its old meters that are prone to tampering, denying it income through unpaid bills.
The company last year raised alarm over the surge in outstanding power bills from its customers ranging from individuals, small businesses, manufacturers, and government agencies after being forced to write off Sh15 billion in unpaid electricity bills that it had lost hope of recovering.