Private power producers, State agency in Sh4.2b tender dispute

Independent Power Producers (IPP) and the Geothermal Development Company are engaged in a battle over a Sh4.2 billion tender.

A consortium has protested to the Public Procurement Administrative Review Board the GDC's decision to cancel the tender.

According to as Alpha Beta Ed PTE Ltd and Ryce East Africa Ltd, GDC cancelled the tender for the supply and installation of a five to ten megawatts geothermal power plant at the Menengai Geothermal Project Station on February 5, 2025.

The petitioners told the board, chaired by Hussein Were, the the power generation company was required by law to proceed with tender evaluation and complete it within 30 days of tender opening. They noted that the tenders were opened on October 18, last year, and the evaluation report lapsed on November 17.

“It is presumed that the tender evaluation was complete and the belated decision of 5th February 2025 to terminate the procurement proceedings is unlawful, mala fide and unconstitutional, as it is bereft of logic and lawful basis,” reads the review application.

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The consortium noted that GDC could not purport to terminate the procurement proceedings at the tail end without the risk of exposing the IPPs to serious risks of losses and injuries.

“The procuring entity violated Section 63(4) of the Public Procurement and Asset Disposal Act, 2015, by failing to disclose, in the letter communicating the termination of procurement proceedings. The impugned decision therefore failed to meet the requirements of the law, and is therefore null and void.”

The companies want the board to order GDC to proceed with the tendering without further delays.

Sosian Energy, another IPP, agreed with companies' position.

GDC confirmed that it invited bids on July 16, 2024. The submission deadline was initially set for August 16, 2024, but was extended to September 18, 2024. This was later extended to October, 2024.

Among the bidders were Rentco Africa Ltd, Oasis Consortium, Kaishan Group Company, Alpha Beta ED PTE Ltd and Ryce East Africa Ltd, GI Africa Energy, Barwasim Africa Consulting and Weid-con Ltd, and Sosian Energy Ltd.

The tender opening was conducted on October 18, 2024 at 11am at GDC, Kawi House offices, and witnessed by representatives of the bidders.

GDC stated that during the preliminary evaluation, the six bids received were assessed against the mandatory requirements. Five met the criteria and proceeded to the technical evaluation stage. The five achieved scores above the required threshold of 70 per cent.

Consequently, the evaluation committee recommended that they proceed to the financial opening.

On November 18, 2024, secretarial comments were submitted requesting the evaluation committee to review its report, where bidders were to submit sealed technical and financial proposals.

The evaluation committee reportedly took into consideration the secretarial comments and reviewed its report in which Oasis Consortium and Alpha Beta ED PTE Ltd and Ryce East Africa Ltd were disqualified from proceeding to the evaluation stage.

This was due to their failure to comply with Clause 27 of the tender document, which required bidders to submit their technical and financial proposals in separate sealed envelopes.

On December 3, 2024, the accounting officer GDC, through a professional opinion, rejected the evaluation committee's recommendation for the four bidders who had passed the technical stage.

The rejection was based on a MW-12 discharge collapse report, which revealed that one of the key wells included in the tender had developed technological challenges.

GDC Acting Supply Chain Manager, Patrick Kapto, said on February 5, this year, they issued a termination letter notifying the Alpha Beta Ed PTE and Ryce East Africa of the project termination.

It pleaded with the board to dismiss the application review for lack of merit.

GDC through lawyer Charity Zeron clarified that the delay in concluding the evaluation was due to the complexity of the tender and the need to ensure compliance with Clause 27 of the tender document. The termination they maintained was necessitated by substantial technological changes outlined in the MW-12 Discharge Collapse Report and was lawful, justified, and in the public interest.

“The claim by the Applicant that the termination exposed them to risks related to their sensitive commercial designs and intellectual property is unfounded. The termination was executed within the framework of the law and was necessitated by technological challenges beyond the Respondents' control,” stated the supply chain manager.

The decision to terminate Tender No. GDC/GRD/OT/001/2024-2025 they maintained was lawful and procedurally valid under Section 63(1)(a)(ii) of the Public Procurement and Asset Disposal Act, 2015 and hence should be upheld by this Board.

The Consortium of Alpha Beta Ed PTE Limited and Ryce East Africa Limited in the review application named the Accounting Officer GDC and GDC as respondents.