Kenya Power suppliers lose push for dollar jobs
A Kenya Power building along Aga Khan walk, Nairobi. Kenya Power has rejected a push by its suppliers to bid for contracts in dollars amid a relentless weakening of the shilling against major foreign currencies.
Kenya Power has rejected a push by its suppliers to bid for contracts in dollars amid a relentless weakening of the shilling against major foreign currencies.
A section of suppliers of equipment such as transformers had petitioned the utility firm to allow them to price their tender bid prices in dollars since the bulk of materials used to make the items is imported.
“Over 90 per cent of raw material inputs in the manufacture of transformers are imported from overseas and payments are done in US dollars. Considering the current trend where the Kenya shilling is losing ground against the US dollar and further taking into account that the contract will run for two years, it is not possible to effectively hedge against the US dollar,” a petition by one of the suppliers stated.
“We request that KPLC allows us to submit prices in US dollars or any of the acceptable major international currencies and KPLC to effect payment in the currency of our bid,” added the plea.
The electricity distributor, however, rejected the dollar pricing request by its suppliers.
“All local suppliers will be bidding only in Kenyan shillings because they buy most of their materials locally so there is no need for them to bid in foreign currencies,” said Kenya Power finance manager Stephen Vikiru.
The decision is set to hit local manufacturers of equipment such as transformers, meters, cables, conductors, wires, and other supplies who have been bidding especially in US dollars to cushion themselves from currency volatility.
The utility says its total monthly average use of foreign currency is $50 million (Sh6.37 billion) and €20 million (Sh2.71 billion).
The local currency has been on a free fall against the US dollar in recent months which has applied pressure on importers of equipment, machinery, fuel, food, electronics, and other products amid a forex shortage.
The shilling yesterday exchanged at a record low of 127.29 against the greenback compared to a mean of 123.42 units on January 3.
“For suppliers of specialised equipment we will make an exception because some of the equipment has to be bought from abroad and are paid for in foreign currencies,” said Vikiru.
