The Standard ­ Monday
Date: 01.12.2014
Page 50
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Coal bidder accuses committee
of bending rules to suit one firm
Consortium says it
won the tender and
has barred the State
from signing the deal
with Gulf Consortium
before its case is heard,
determined
By KAMAU MUTHONI
Ipsos Kenya ­ Acorn House,97 James Gichuru Road ­ Lavington ­ Nairobi ­ Kenya
The Standard ­ Monday
Date: 01.12.2014
Page 50
Article size: 535 cm2
ColumnCM: 118.88
AVE: 285333.33
The move to have a 960 megawatt
In (he initial stage, Centum, had control over its management.
Tata formed the first consortium
coal plant in Lamu hangs in the bal­ expressed its interest bui was thrown
ance, after one ofthe bidders claimed out. Centum had initially partnered with Gulf and Centum and later exit­
it had won the tender that was award­
with Sepco and Thermax, but the ed the scene. HCIG in its case argues
ed to Gulf Energy Consortium. It cites consortium was knocked out of the that this would have led to Gulf con­
irregularities in the tendering pro­ expression of interest stage.
sortium being disqualified in accor­
cess. Hcbei Construction Investment
Another partner in the same con­ dance with PPPA section 46.
Group (HCIG) and Liketh Investment sortium (Gulf), Tata Power had made
It argues that Tata ought to have
Kenya, through their consortium two entries in lhat bid (hough it went been out of the power game in the
HCIG­LIKETH in documents before to the next stage to measure who first assessment as it had double bid­
the Petition Committee say Gulf Ener­
would bid the lowest in terms of cost.
ded and that both Tata and Centum
gy Consortium was never in the scene
According to the Public Private could noi h;iv. been allowed lo merge
but it won the tender.
Partnership Act (PPPA) section 46 again and get in the process in anoth­
The company adds that Gulf Ener­ rule four, a person who is a mem­ er group.
gy Consortium would produce power ber of a consortium cannot submit
LEGAL ADVICE
at higher cost considered to the one it a bid, whether directiy or indirecdy
{IIC1G­LIKETH) had proposed in its or through another consortium or a
According to the Ministry of En­
bid papers, adding that the rival firm company which submits a bid and in ergy Principal Secretary Eng Joseph
first ought not to have been given the the case of a company if that person Njoroge, in his affidavit defending
contract in the coastal region.
owns majority shareholding or has how Gulf Energy won the tender, the
In the documents filed by HCIG­
withdrawal of Tata from Guif which it
LIKETH in support of their claim,
did in March 211, 2014 was within the
Gulf consortium will channel pow­
law provided in the PPPA.
er into the national grid at a cost of
He said he had sought legal ad­
Sh59.8 billion per year compared to
vice from the Attorney General Githu
its Sh43.4 billion per year ­ which is
Muigai and Public Private Partnership
Shl6.4 billion higher that had been
Unit on the issue in which they ad­
proposed in the tender document,
vised him that it was well within the
KEY WORKS
The two companies are charging
the tax payers Sh24 billion and Sh32
billion annually for pulling up the in­
frastructure in the Lamu power plant
in which the consortium composed of
Gulf Energy, Sichuan Number Three
Electric Power Construction, Suchan
Electric Power Design and Consul­
tancy Company, Centum Investment
Company Ltd and CHD Power Plant
Operation Company being on the
higher grid.
"One of the underlying consid­
eration in the entire bidding pro­
cess was the matter of affordability
and that unnecessary burden should
never be imposed on the end user, in
line with this the petitioner (HCIG­
LIKETH) had lhc lowest Base Capac­
ity charge which was one of the most
fundamental parameters to be con­
legal provisions governing the tender­
ing process. "The Ministry of Energy
and Petroleum wrote to the Gulf­Cen­
tum Consortium to submit the bo­
na­fides ofthe replacing members so
as to determine whether after replac­
ing the departing members the con­
sortium would still remain eligible,"
Njoroge said.
The reconstituted Gulf consor­
tium, according to Njoroge was vig­
orously evaluated and found to have
sidered in the Public Private Partner­
ship project," HCIG­LIKETH says in
its suit papers filed by 1. Thongori and
Company Advocates.
The initial bidders were 26. The
ministerial tender committee went
through the documents submitted
by the companies and nine passed
the technical requirement stage.
Ipsos Kenya ­ Acorn House,97 James Gichuru Road ­ Lavington ­ Nairobi ­ Kenya
The Standard ­ Monday
Date: 01.12.2014
Page 50
Article size: 535 cm2
ColumnCM: 118.88
AVE: 285333.33
been die preferred institution for the
next power energy face that is deemed
to lower the cost of power in which
will effectively be felt by the consum­
ers. Guif Energy CEO Francis Njogu
also defended its return to the race,
saying lhat the law allows a bidding
consortium to replace members that
have stepped down.
"By a letter dated February 25, the
Centum­Gulf consortium wrote to the
ministry seeking approval to replace
Cennergi, which had withdrawn. By
its letter dated March 14, the ministry
requested the Centum­Gulf consor­
tium to submit bona fides of the re­
placing members," Njogu said.
In test is section 46 rule six and
seven in which rule six provides that
where a member withdraws from the
consortium the contracting authority
may disqualify that consortium from
participating in the bidding process or
review the terms and conditions of a
project agreement entered into wirh
the consortium.
Further, the same section rule sev­
en provides that rule six cannot apply
where the consortium replaces the
member who withdraws with anoth­
er parry so as to ensure that the con­
sortium remains eligible throughout
the tender and implementation pro­
cess except for construction and de­
sign criteria at the later stage of the
project.
NO COMPLAINTS
According to IICIG­LIKF/TIl in
its case, Gulf ought to have also ex­
ited from die bid ditough this rule.
But Njoroge in his reply to the claim
said the ministry had not received any
complaint from the bidder regarding
the reconstitution of Gulf Energy.
Njoroge says that the Ministerial
Tender Committee decision saw Gulf
Consortium bag a ShI74 billion deal
to construct the plant. "The Ministe­
rial Tender Committee at its meeting
on December 5, 2013 approved the
re­evaluation of seven unsuccessful
bidders. The re­evaluation commit­
tee checked the unavailability of doc­
uments by considering both the hard
and soft copies which had been sub­
mitted," Njoroge said.
Another twist in the suit between
the two companies is the case filed
challenging the composition of the
petition committee. The basis of the
case before High Court ludge, Justice
Isaac Lenaola is that the team did not
meet the constitutional threshold as it
only composed of two tribes.
HCIG last week managed to bar
the Government from signing die deal
with Gulf Consortium before this case
before committee is heard and deter­
mined.
Justice Mumbi Ngugi in her rul­
ing noted, "Pending the hearing and
determination of the case before the
petition committee, conservatory or­
ders arc hereby issued restraining the
respondents from dealing, signing or
approving the tender," she ruled.
Ipsos Kenya ­ Acorn House,97 James Gichuru Road ­ Lavington ­ Nairobi ­ Kenya
The Standard ­ Monday
Date: 01.12.2014
Page 50
Article size: 535 cm2
ColumnCM: 118.88
AVE: 285333.33
Energy Principal Secretary Joseph Njoroge {centre) chats with Parliamentary
Energy Committee Chairman Jamleck Kamau (left) and Committee Member
Kanini Kega after their recent meeting at County Hall in Nairobi on award of
Coal power plant [photobonif ace okendo]
Ipsos Kenya ­ Acorn House,97 James Gichuru Road ­ Lavington ­ Nairobi ­ Kenya