Kenya Power Ordered to Proceed with Sh6 Billion Meter Tender

The High Court of Kenya has ordered Kenya Power to proceed with a Sh6 billion smart meters contract awarded to a Chinese company, Hexing Technology. The court overturned a decision by the Public Procurement Administrative Review Board (PPRB) that had cancelled the contract.

Court Ruling on Contract Cancellation

The High Court found that the PPRB erred in annulling the awards for Categories 2 and 3 of the tender. Justice Roselyn Aburili stated that the board reopened and re-determined issues that had already been conclusively settled by a previous court ruling in favor of Hexing Technology and Magnate Ventures. The court determined that the PPRB’s actions defied orders prohibiting re-tendering and disregarded findings that the tender categories were distinct.

Legal Challenges by Hexing Technology

Hexing Technology and Magnate Ventures separately filed lawsuits against the PPRB and Kenya Power and Lighting Company (KPLC), arguing that the board’s decision to re-advertise the tender circumvented previous court orders. Hexing Technology contended that another company, Chint Meters and Electric Kenya, had urged the PPRB to quash its disqualification and call for a fresh application. The company also asserted that Justice Chigiti’s ruling validating the tender was binding on KPLC and the PPRB. They further argued that the board contradicted itself by finding the tender process non-compliant while simultaneously acknowledging a compliant procedure for the successful bidders.

Arguments by Magnate Ventures

Magnate Ventures argued that the PPRB erred in requiring Kenya Power to physically inspect local manufacturers’ factories, a requirement they contended was only applicable to companies without prior supply history. They asserted that the tender document clarified this condition. Magnate also stated that the evaluation committee properly conducted due diligence on successful bidders in Category 3, who lacked prior supply experience, and prepared a required report. The company maintained that the board exceeded its powers by mandating the same process for all bidders.

PPARB’s Response

The PPRB defended its actions, asserting that it complied with Justice Chigiti’s orders by re-hearing and nullifying awards in Categories 2 and 3. The board argued that the evaluation committee’s approach lacked transparency, predictability, and cost-effectiveness, and did not adhere to the tender document. They cited the absence of a detailed evaluation summary, inconsistent application of due diligence, and the use of outdated market surveys.

Kenya Power’s Position and Financial Impact

Kenya Power informed the court of an urgent need for 420,000 electricity meters, a number that continues to increase and is negatively impacting the public. The corporation had allocated meters to local dealers and suppliers, with separate lots designated for previous participants and local manufacturers. Kenya Power stated that the legal disputes had resulted in losses exceeding Sh7 billion, and that requiring re-tendering was contrary to annual procurement plans.