Kenya Power has been cleared to buy transformers worth Sh3.9 billion within days following a tendering row, a decision that will help plug a shortage occasioned by the country’s growing demand for electricity connections.
The Public Procurement Administrative Review Board (PPARB) dismissed a petition by one of the interested bidders, Empower Transformers, which was pushing for delivery of the transformers beyond the set 14 days.
Empower Transformers had also argued that Kenya Power had pitched the emergency tender to a section of firms, arguing that it unfairly edging out other interested bidders. A sharp increase in demand for transformer equipment, as Kenya moved to increase connectivity in rural areas and meet demand for new homes, left the utility with a backlog of paid orders.
This prompted Kenya Power to float a tender last month where it will buy slightly over 850 transformers within 14 days.
The review board backed the tender, saying it was within the law.
“Consequently, after hearing the parties and evaluating all the evidence presented, the board finds that the procuring entity did not violate any procurement laws as alleged by the applicants,” the PPARB tribunal said in its ruling made on April 29.
“Additionally, the tender’s restriction to bidders with available stock constitutes a procurement design choice rather than a discriminatory exclusion, particularly given that the urgency was publicly justified and time-bound.”
A strong shilling and increased electricity sales have recently improved Kenya Power’s fortunes as the firm reaped big from increased connections on the back of availability of materials such as meters and transformers.
The new transformers have also helped cut blackouts, Kenya Power says.
The State-owned electricity distribution company turned down requests from Empower Transformers to extend the delivery period beyond 14 days. At the review board, Empower Transformers failed to prove the allegations that Kenya Power had pitched the Sh3.9 billion tender to a few selected firms.
The appeals board also ruled that Kenya Power’s urgency in acquiring the transformers was justified.
Kenya Power connected 194,654 new customers in the six months to December amid legal suits that have previously delayed the process.
The firm reckoned that the increased supply of electricity boosted the profits for the first half to December and eased the impact of a cut in tariff to homes on July 1 by Sh1.50 per kilowatt hour (kWh).
Units of electricity sold rose five percent to 5,506 gigawatt hours (GWh), but sales dropped 5.4 percent to Sh107.42 billion due to the tariff cut.
This helped the utility declare the first interim dividend in nine years, a further boost to shareholders after the firm’s half-year profit jumped over 30 times to Sh9.97 billion.
The electricity distributor declared a dividend of Sh0.20 per share as net profits for the six months to December rose from Sh319 million posted in a similar period a year earlier.
Paid-up customers in some areas have gone for more than two years without power due to the legal suits filed to halt procurement by Kenya Power. Most of the cases have been fronted by local manufacturers.
At least 85 percent of the transformers in the Sh3.9 billion deal are to connect customers who have already paid up, with the remainder being for replacing the ones that have been vandalised or damaged.
Only local dealers were invited to bid for the supply of transformers with a capacity of between 25 kilovolts ampere (KVA) and 100 100KVA. Transformers with a capacity of 50KVA 11/0.42KV make the biggest chunk at 1,079 pieces, followed by 50KVA 33/0.42KV (840 pieces).
Kenya Power has previously cited litigation as a risk for the continued supply of materials.
“There was a shortage of critical materials, particularly transformers and meters, mainly due to the spillover effects of protracted procurement litigations from the previous years,” Kenya Power said earlier.
In 2023, the chairperson of the board of Kenya Power, Brenda Masinde, disclosed that the company would seek approval from the Ministry of Energy to be granted special procurement exemptions in buying critical items such as transformers and meters to plug shortages.
