Russian group OJSC loses KenGen bid

A delegation from Tanzania tours the Ol Karia power 1 station in Naivasha on August 7, 2013. The government wants to further the supply of geothermal power. PHOTO | MACHARIA MWANGI | NATION MEDIA GROUP

By  ABIUD OCHIENG

A consortium led by Russian firm OJSC Power Machines Ltd has lost its quest to be awarded a multi-billion-shilling tender to supply geothermal power generation units for the Ol Karia V plant.

This was after the Court of Appeal last week upheld a High Court decision in favour of another consortium led by Rentco East Africa.

PROPOSAL
Justices Asike Makhandia, William Ouko and Agnes Murgor ruled that, from the technical and financial analysis presented, there was no doubt that the proposal by Rentco East Africa, Lantech Africa and Toshiba Corporation consortium had the highest megawatts output.

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“This also presented the highest availability factor and tariff combination through which Kenya Electricity Generating Company Ltd (KenGen) would get the highest revenue, of $785,273.25 (Sh81m),” the judges ruled.

HIGH COST

OJSC Power Machines, Transcentury and Civicon consortium had the lowest guaranteed output but the highest connection cost.

KenGen had told the court that awarding the contract to OJSC’s consortium would translate to the power generating firm foregoing a net annual revenue of $1,190,090.40.

REVENUE
The Public Procurement Administrative Review Board had also noted that OJSC’s consortium had not provided a breakdown of its proposed monthly revenue of $822,038.

KenGen drew the conclusion that the difference between OJSC’s consortium net guaranteed output of 50.5MW and that of Rentco’s consortium (58.42MW) was equivalent to 15 per cent.

“KenGen appreciated that if the tender was awarded to OJSC’s consortium, then some 7.42MW would have to be obtained through the expensive thermal power, which would translate to a daily cost of Sh3,761,049.60 (Sh114,398,592 monthly and 1,372,783,104 yearly),” the three-judge Bench said..

EXPERIENCE
OJSC’s consortium, through lawyer Philip Nyachoti, had argued that Rentco did not meet the three years experience required to win the tender.

“KenGen was well aware of this fact, having previously disqualified Rentco,” lawyer Nyachoti said.

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