Court clears KenGen power supply deal with RentCo East Africa Ltd

The Kengen had argued that it is in the public interest that the application by OJSC Power Machines be dismissed in order for the project to move forward.

Wednesday January 20 2016

One of the Kenya Electricity Generating Company (KenGen) steam power harvesting wells in Olkaria, pictured on February 14, 2013. The multibillion-shilling project to provide geothermal power generation units for Kenya Electricity Generating Company Ltd (KenGen) at the Olkaria plant will proceed as scheduled. FILE PHOTO| BILLY MUTAI | NATION MEDIA GROUP

One of the Kenya Electricity Generating Company (KenGen) steam power harvesting wells in Olkaria, pictured on February 14, 2013. The multibillion-shilling project to provide geothermal power generation units for Kenya Electricity Generating Company Ltd (KenGen) at the Olkaria plant will proceed as scheduled. FILE PHOTO| BILLY MUTAI | NATION MEDIA GROUP  NATION MEDIA GROUP

By ABIUD OCHIENG
More by this Author

The multibillion-shilling project to provide geothermal power generation units for Kenya Electricity Generating Company Ltd (KenGen) at the Olkaria plant will proceed as scheduled after the court dismissed an application by a losing firm which was challenging the award of the tender to its rival.

Mr Justice George Odunga ruled that the application by Russian company OJSC Power Machines Ltd, challenging the award of the Sh52 billion tender to RentCo East Africa Ltd, ought to have been filed as an appeal before the board and not taken to court.

The Public Procurement Administrative Review Board (PPARB) had told the court that the tender had three components of evaluation at the financial stage namely availability factor, Output MW, and low cost.

However, the Russian firm focused only on one aspect of evaluation, low cost while ignoring the other two components of the tender.

The Board therefore said that it considered the three components and agreed with the procuring entity (Kengen) that OJSC Power Machines Ltd’s bid was unresponsive and that the most responsive bid was that of RentCo East Africa.

“That was a finding of fact based on the construction of the bid documents hence could only be overturned on a merit review. It is my view that the grounds advanced by OJSC Power Machines ought to have been the subject of an appeal as opposed to the kind of proceedings before this court,” said Justice Odunga.

He said the board was under both constitutional and statutory obligations to ensure that the procurement complied with the principles of promoting economy and other principles set out in the constitution and the Public Procurement and Disposal Act, which binds the Board.

“Therefore since the Board’s jurisdiction in the exercise of its powers of review are wider, it may well be entitled to consider the legality and constitutionality of the decision made by the procuring entity and make appropriate orders, including annulling anything done by the procuring entity in the procurement proceedings,” ruled Justice Odunga.

The Kengen had argued that it is in the public interest that the application by OJSC Power Machines be dismissed in order for the project to move forward.

In its view, it is critical that the project progresses there being an overwhelming demand for electricity in the country which exceeds the supply and that the contested project seeks to address the deficiency in the supply of electricity in the country.

The judge however said that the tender award would have been canceled had the court established a violation of the law because public interest is best served by enforcing the Constitution and statute.

The Russian firm had in its application in court, attached as evidence a letter from KenGen disqualifying RentCo from a separate tender over cooked books, a month before awarding it the Sh52 billion deal.

advertisement