Kenyan contractors are accusing Kenya Power of denying them tenders in the Last Mile Connectivity projects in favour of foreign companies.
Some 2,000 registered companies that operate under the umbrella Power transmission Line Contractors Association (PTLCA) said the power utility firm has been giving local contractors terms that are impossible to meet.
The Last Mile is an ambitious Jubilee government project that aims to connect Kenyans in Rural areas, townships and schools to the National grid in a bid to spur economic growth. It was expected to create jobs across the country.
Last year, the government launched the fourth phase, with Sh22 billion from multilateral lenders, including the Agence Française de Développement (AFD), the European Union and the European Investment Bank.
It targets 280,475 customers in 32 counties across the country in the next three years.
The first phase of the project targeted 314,200 households, giving electricity to an additional 1.5 million Kenyans.
The second and third phases comprised the installation of new transformers and extension of a low-voltage network to reach an additional 500,000 customers, thereby bringing an additional 2.5 million Kenyans to the power grid.
But now Kenyan contractors say the conditions set in the tender documents for the fourth phase are so stringent no local company can qualify.
Most of the companies being awarded the tenders are from China and India.
“The nature of the Last Mile contracts is that small power line construction jobs (across various counties) are consolidated to make a single lot. The county’s small jobs are then lumped into several lots then awarded to single contractors per lot. This consolidation is effectively used to give the contract a huge value and thus used as an excuse to lock out local contractors under guise of lack of capacity,” said PTLCA Executive director Magu Ngaire.
“The association is of the opinion that the Last Mile scheme is a waste of money. Instead of KPLC procuring four contractors for works across the country, the same work could be given to 200 contractors,” he added.
He said that the local contractors have 20,000 employees who will be impacted by the new Kenya Power policy.
Their grievances mirror those of the Energy Sector Contractors Association (Esca), which has moved to the Public Procurement Administrative Review Board (PPARB), seeking to stop tenders in the energy sector, citing discrimination.
Kenya Power officials declined to comment on the grievances by PTLCA and directed us to the response they have filed with the PPARB.
“This is an AFD-financed project, whose procurement is based on the financier’s procurement guidelines. The bidding document took into account the law, KPLC’s requirements as well as the AFD procurement guidelines,” Kenya Power states.
The power utility said that in most cases, contracts are given to specific companies picked by the financier as part of the funding agreement.
“The process is in compliance with relevant internationally recognised practices, particularly those recommended by the Organisation for Economic Co-operation and Development,” says Kenya Power.
PTLCA have also taken issue with the company for allowing the foreign contractors to procure their own materials, a move they say is prone to abuse.
“KPLC is effectively introducing a layer of middlemen to supply it with materials. Since these materials are part of the contract price, KPLC, and thus the public, loses as these brokers are mostly not manufacturers and have to add their mark-up. It would serve the public well if KPLC directly procured the materials. It would save Kenyans money,” said Mr Magu.
“Under the contract, KPLC will procure for design, consultancy and labour in addition to materials from the contractors. KPLC has designers, surveyors and engineers, whose very work is being contracted out.”
The local firms say that the foreign contractors still end up subcontracting the works to the “small” local contractors.
“The profits made by these foreigners are eventually repatriated rather than being ploughed back to the local economy.”
He said the foreigners pay poor rates for the subcontracts and in some instances fail to pay altogether.
The Kenyan Constitution requires that major projects with huge economic potential involve the public in the final decision.
The contractors claim that KPLC did not go for public participation in arriving at the decision to consolidate small jobs, a decision that has edged them out.