KenGen fights off irregular tender claims

October 13, 2011
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, NAIROBI, Kenya, Oct 12 – The Kenya Electricity Generating Company, KenGen, is fighting off claims that it has misappropriated Sh8 billion in an irregular tender.

An article published by the Nairobi Law Monthly alleges that KenGen Managing Director Eddy Njoroge was involved in a shoddy deal for the supply of a Wellhead Project that was tendered for in 2009.

A Wellhead is a source of geothermal energy which when fitted with an efficient reservoir- sensitive and portable unit, can produce up to 5 Megawatts of electricity a month, adding to the country’s national grid.

The pilot project had failed and Green Energy Group (GEG) Company from Norway was awarded the contract instead. This was after GEG emerged as the lowest bidder having quoted Sh9.7 billion and following both technical and financial evaluation.

“The article we are referring to states that KenGen paid Sh8 billion. The truth of the matter is KenGen has not made any payments and no firm decision to award them the contract, until such time the first unit runs successfully, if it doesn’t; that’s the end of the story and we get our refund,” said chairman of the board Titus Mbathi.

The claim by the monthly publication, states that Njoroge, through KenGen had paid GEG Sh366 million, an allegation that KenGen vehemently denied.

The firm said Njoroge and KenGen did not transact business with Triton Proprietor Deepak Kamani and termed the article in ‘highly defamatory.’

The embattled MD maintained that the project was undertaken after direct procurement which is in line with the law and the company is not at a financial risk.

“There was urgency for electricity because 2009 we had a serious drought and we had been looking for new technology in house. So when GEG came in and gave a presentation to show they could do it, we jumped and covered ourselves in terms of the risks,” Njoroge said.

In the agreement, KenGen would only pay 50 percent of the total price (Sh437 million) with Sh106 million being payable against receipt from Green Energy AS of Norway (GEG) bank, Sh265 million payable against shipping documents and the remainder of Sh66 million payable after completion of the first acceptance test.

In return, KenGen would pay the remaining 50 percent after presentation of the Second Engineers Acceptance certificate certifying the plant had successfully passed the 18 month pilot run.

Part of the conditions also was that if GEG failed to deliver a successful unit during the test period, they (GEG) would not be entitled to the balance of the contract price but they would have to replace the equipment at no cost to KenGen. No further payment would be made unless the plant is successful and within the time specified or at a reasonable time, the firm added.

These conditions have been adhered to with GEG having to replace the equipment which was found to be at fault after the first test was unsuccessful.

Njoroge further adds that the payment made so far has been in accordance with the contract.

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