KenGen cancels disputed Sh52bn wellhead contract

Kenya Electricity Generating Company (KenGen) has cancelled a controversial Sh52 billion geothermal wellhead leasing contract that is the subject of a court battle.

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 aise 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.

This marks a new twist in the multi-billion shilling tender given KenGen’s managing director Albert Mugo did not refer to the cancellation when he appeared before the Public Investments Committee (PIC) Tuesday. MPs have been probing the deal.

Instead, Mr Mugo insisted KenGen was still compiling its report following due diligence on the consortium.

“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.

READ: KenGen boss put on the spot over Sh52bn contract award

“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.

READ: KenGen Sh52bn contract winner defends award of deal

KenGen also came under criticism for not awarding the tender to the lowest financial bidder as stipulated in the request for proposals and for changing the criteria in favour of the highest revenue bidder.

Mr Yego and company secretary Rebecca Miano said KenGen will be seeking direction from the Public Procurement Oversight Authority following the emergence of the new evidence on the winning consortium.

“We are still within the window period for the award or cancellation of the tender,” Mr Yego said.