The High Court this week stopped Kenya Power from going ahead with its Sh22 billion tender for the supply of smart meters, hitting the utility with the latest blow in its fresh attempt to purchase the crucial gadgets that have run out of supply.
The tenders issued by the company for the supply of meters are lucrative, and just like those issued for the supply of other key gadgets, equipment, and materials such as transformers, cables, and poles, are fought for tooth and nail by both local firms and multinationals.
The latest tender in question was issued by the utility in February this year for the supply of some 736,697 electricity meters over the next two years in six slots.
The tender was restricted to local manufacturers.
Kenya Power thereafter issued notifications of intention to award the tender to four local firms including Inhemeter Africa Company Ltd, Smart Meter Technology Ltd, Yocan Group Ltd, and Magnate Ventures Ltd.
Benedict Kabugi Ndung’u moved to court last week arguing that the tender’s eligibility criteria were watered down to include local assemblers of meters and not manufacturers as earlier advertised, through six addenda, a fact that changed the substance of the original tender document.
In his suit, Mr Kabugi said the entire process leading to the award was marred by procedural and substantive irregularities including breach of several sections of the Public Procurement and Asset Disposal Act.
This week, Justice John Chigiti certified the petition as urgent and directed the power utility company not to sign any agreement with winners in a twist that is set to delay the purchase of the meters.
“The leave so granted do operate as a stay of implementation of any decision arising from the notification of intention to award dated 2nd May 2023 including but not limited to actual tender award, signing of the procurement contract, execution and/or performance of procurement contract…,” said the judge.
Interestingly, three of the four local firms that the company has issued notifications in the latest tender – Inhemeter, Magnate, and Smart Meter Technology – were part of a quartet of firms that lost a bid for the cancellation of a Sh2 billion meters tender last year.
The Public Procurement Administrative Review Board (PPARB) in June last year dismissed the application filed by the three firms and Shenzhen Star Instrument Company Ltd.
Foreign firms "favoured"
The companies had complained that Kenya Power locked them out of the tender by placing restrictions that favour foreign firms.
One of the requirements was for bidders to have at least 10 years of manufacturing experience and have supplied power utility companies to at least three continents in either Europe, North America, Africa, Asia, or South America.
PPARB, however, dismissed the application stating that the companies moved to the board late and that the local manufacturers were aware of the tender early enough but moved to challenge the decision late.
Even as the latest court battle rages, Kenya Power has been battling a severe shortage of meters, which has frustrated thousands of customers who are seeking new meters to replace their faulty or stolen ones.
The utility has in recent months struggled to keep up with the demand for meters as it rapidly connects more customers to the grid forcing new customers to wait longer to get meters.
The company in December for the first time crossed the 9 million customer mark as it races to achieve universal electricity coverage within the next decade.
The shortage of electronic gadgets last year forced the utility to go after landlords and homeowners to repossess their idle meters that had not been used for six months so that the meters could be sold to other customers.
“As part of its normal business operations, Kenya Power is continuously reviewing its customer and asset database to identify ways of optimising its resources. One of the outcomes of this process is the recovery of meters that have been inactive for six months, which we re-allocate to active customers to ensure that the business makes a return on all its assets,” said Kenya Power last year.
Kenya Power has, however, managed to purchase thousands of new meters this year thanks to the PPARB decision that enabled the company to tender for the meters last year.
The utility last year awarded Chinese firm Hexing Electricals Ltd of Hangzhou a contract to supply some 250,000 single-phase meters to address the shortage of critical gadgets.