Kenya Power is caught in a fresh tussle with some local transformer manufacturers after the utility firm locked out suppliers with pending deliveries from new bids.
The utility firm this month called for bids to supply some 4,224 transformers annually to address a biting shortage that has derailed new connections and the replacement of faulty ones.
Kenya Power, however, locked out bidders who had failed to honour at least half of their supply orders, a move that has irked the manufacturers who argue the move will hinder the growth of local manufacturing.
“The clause completely knocks suppliers out of the tendering exercise. The condition is prejudicial and knocks us out and clearly works against the government agenda for local manufacturing. Kindly reconsider this clause,” NTM, one of the bidders, protested.
NTM’s prayer was also repeated by Tanelec Kenya Limited.
Kenya Power, however, stood its ground, stating the requirement is mandatory and cuts across all tenders for critical materials and is aimed at ensuring only reliable firms participate.
“This ensures only performing and reliable suppliers are eligible to bid,” said the utility.
But this is not the only bone of contention as new manufacturers want Kenya Power to allocate them a larger quantity of transformers to supply.
They argue that the company has allocated just five percent (214) out of the 4,224 required transformers to manufacturers that have been in operation for less than three years.
Kenya Power maintains that the measure is necessary to ensure that the new firms will deliver if they win the tender.
“Transformers supplied by first-time manufacturers need to be installed, tried, and tested on-site to review performance and confirm the quality of the transformers is satisfactory before being eligible for any subsequent tenders,” said the firm.
Kenya Power has also instructed the firms to only quote in Kenya shillings.
The firms had requested the firm to allow them to bid in foreign currencies, arguing they will be exposed to forex losses during the two-year tenure of the contracts at a time the shilling is rapidly weakening against the US dollar.
“We request Kenya Power allows us to submit prices in US dollars or any of the acceptable major international currencies and Kenya Power to effect payment in the currency of our bid,” said the firms.
“Over 90 percent of raw material inputs are imported from overseas.... Considering the current trend where the Kenya shilling is losing ground against the US dollar it is not possible to effectively hedge against the US dollar,” they argued.