Trouble for Kenya Power over Sh1 billion tender requirement

The High Court has barred financially troubled Kenya Power from procuring insurance brokerage services after allegations that local firms had been locked out of bidding.

Judge James Makau temporarily suspended the prequalification process for the tender in response to a petition by rights activist Okiya Omtatah.

Mr Omtatah says Kenya Power cancelled the first tender advertised on June 8 and altered eligibility requirements in a new advert on July 20.

The new conditions demand a minimum professional indemnity cover of Sh1 billion for eligible bidders. In the first advert, the required minimum was Sh200 million and the territorial limit was Kenya.

Mr Omtatah says the qualifying expression “territorial limit within Kenya” was expunged in the second tender document.

A professional indemnity cover protects a company’s workers from legal liability for any acts of negligence they may commit in the course of their duties.

Unreasonable

“The requirement for a professional indemnity cover of minimum limit Sh1 billion is unreasonable and oppressive because even the Insurance Regulatory Authority itself requires a Professional Indemnity Insurance Policy with a minimum limit of Sh10 million,” says the activist.

Mr Omtatah is also aggrieved that the evaluation criteria outlined in the second ad require eligible bidders to have premium turnover of Sh2 billion and above for 2019 and 2020. The required turnover was Sh500 million and above in the first ad.

“Raising the total premium turnover from an optimal Sh500 million in the first tender to an optimal of Sh2 billion in the second tender is totally outrageous and oppressive,” he argues.

The conditions, he says, are unreasonable and oppressive to many local brokers, favour large firms and are designed to lock out local players.

“The disputed requirements will knock most local businesses out of the market, leaving it for multinationals to dominate. The decision to deny local insurance brokers a chance to earn a livelihood militates against their economic and social rights under Article 43 of the Constitution,” he says in the court papers.

The sought insurance services are for the period between September 2021 and August 2023.

Infighting

Mr Omtatah argues that infighting between Kenya Power’s top managers and the board over changes to the original tender document delayed its release.

The standoff, he says, persisted for nine days until July 29 when the board had its way and the document was posted on Kenya Power’s e-procurement portal.

He wants the court to quash the tender and declare that the conditions are unlawful, unreasonable, oppressive, unfair, opaque, discriminatory and, therefore, unconstitutional.

The activist also wants a declaration that Kenya Power tenders must have a provision for 30 per cent affirmative action under the Access to Government Procurement Opportunities programme.

The case will be mentioned on September 22.

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