News

KenGen cancels disputed 50 MW wellhead leasing contract

Wellhead plants of Green Energy Geothermal at Olkaria, Kenya (source: GEG/ Lydur Skulason)
Alexander Richter 18 Nov 2015

KenGen cancels a 50 MW geothermal wellhead plant leasing contract, following the dispute on the legality of the tender results and irregularities in connection with one of the companies in the consortium that was awarded the contract.

Following legal action of one company that lost the tender for the development of a 50 MW geothermal wellhead power plant leasing project, Kenya Electricity Generating Company (KenGen) has now cancelled the Sh52 billion ($492 million) geothermal wellhead leasing contract, as reported by Business Daily Africa.

Rentco East Africa won the tender one month after it was disqualified from participating in another contract for presenting forged documents and irregular financial statements.

In a letter dated November 9, seen by the Business Daily, KenGen supply chain director Philip Yego informed the consortium that included Rentco of the decision to terminate the procurement process for the leasing of 50MW geothermal wellhead units.

“We wish to advise that the procumbent process has been terminated upon comprehensive review of your submission. The financing plan and related supporting documents were inconsistent with the objectives of the project,” Mr Yego says in the letter.

“We realised that at the evaluation stage, there could have been an oversight for not looking at specific companies in the consortium. The recommendation to award the tender was based on entire consortium,” Mr Mugo said.

“We have realised one of the companies, had it been looked at as a single entity, it would not have gone through the consortium. We will review the decision of giving the letter of intent to consortium. We are still at a period where the tender is still valid.”

Documents before the House showed that KenGen’s tender committee had found Rentco to have presented a false certificate of incorporation to win the wellheads tender. Leasing of the wellheads power generating unit was awarded on a build, operate and maintain basis.

The matter has since become the subject of a legal suit pitting Rentco and an associate of TransCentury.

KenGen says that it was still within a period of choice of either awarding or cancelling the tender.

Source: Business Daily Africa