MPs told Gulf, Centum rightfully won coal bid

September 11, 2014 1:15 pm
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Kengen Regulatory Affairs Director Simon Ngure who chaired a 14-member Technical Evaluation Committee
Kengen Regulatory Affairs Director Simon Ngure who chaired a 14-member Technical Evaluation Committee

, NAIROBI, Kenya, Sept 11 – The National Assembly Committee on Energy and Communication on Thursday began its probe into the award of the Sh184 billion tender for the construction of a 960MW coal power plant in Lamu.

The Committee chairman Jamleck Kamau said they have taken up the matter after two bidders claimed that the project had unfairly been granted to a consortium led by Gulf Energy and Centum Investments.

Kengen Regulatory Affairs Director Simon Ngure who chaired a 14-member Technical Evaluation Committee told that House team that they discovered glaring anomalies that led to the Ministry disqualifying the other two Chinese firms from the bid.

Ngure said the other firms’ technical documents as presented would have led to a future adjustment of the design of the plant which would also mean modification in the investment and energy cost.

Documents provided by the Ministry indicated that Shanghai Electric Power Company Limited and HCIG Energy Investment had used wrong figures in the formula given by the ministry to calculate the cost of power.

“The change in specific fuel consumption means higher revenues for this bidder,” said Ngure.

Ngure told the committee that the Ministry had asked the bidders to calculate the cost of energy by using a reference fuel rate that was to be determined by indicating specific fuel consumption of the plant at site, multiplying it by US$50 and then dividing by one thousand.

In the documents, Gulf Energy gave its figure as 0.4275 and 0.2138, the HCIG team gave 0.310 against 0.0299 while the Shanghai team gave 0.315 against 0.022.

On application of the formula for HCIG Energy, it was noted that there was a major discrepancy between the readout of US$ 0.0299 and the derived one of US$ 0.0155, while upon application of the formula for Shanghai Electrical, it was noted there was a discrepancy between the readout value of US$ 0.022 and the derived one of US$ 0.01575.

The Gulf Energy figure remained constant at 0.2138.

Ngure maintained that his team had done everything according to the law accusing the two firms of having their own hitches that may have brought about challenges in the final computation.

The project will cost approximately Sh177 billion ($2billion), of which approximately Sh44.2billion ($500 million) will be funded by equity and the balance will be funded through debt.

The coal project is part of the 5,000 Megawatts power projects expected to be complete in three and a half years time.

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