A Sh6 billion tender scandal has hit Kenya Power, with revelations that it awarded the contract to a company registered less than a year ago.

The Public Procurement Administrative Review Board (PPARB) raised the alarm when it nullified the contract for supply of single phase pre-paid meters between Kenya Power and Lighting Company Limited and Chinese firm, Hexing Technologies Ltd.

“It is suspicious and beats logic how a company that has existed for only 11 months was awarded the multi-billion shilling contract when the tender submission checklist clearly stated that all bidders must submit audited accounts of at least 18 months, meaning they had to be in operation for at least two years,” said the review board.

The PPARB ruled that the public stood to lose Sh1.2 billion if they did not cancel the contract, given that the total cost for supply of the pre-paid meters was inflated from Sh5.3 billion submitted by the lowest bidder to Sh6.6 billion awarded to the Chinese company.

No guarantee

To make it worse, KPLC allegedly awarded the contract without any guarantee that the company had the financial capability to supply the meters.

The review board said it was at a loss as to how KPLC could accept a letter of guarantee or a letter of comfort that only stated that it had been written “without guarantee” and “without prejudice”.

Records from the registrar of companies show that Hexing Technologies Ltd was registered on November 3, 2015. It has three shareholders; Hexing Electrical Ltd (Chinese), Hexing Hongkon Limited (Chinese) and Rational Technology Kenya Limited (Kenya). Its directors are listed as Dai Yingpen, Chem Yuejiao and Shamir Dharamshi Radia.

“Even the company directors admitted that they were registered in Kenya for less than a year, and they do not have any audited financial reports. It remains unclear why KPLC awarded them the contract with the glaring discrepancies,” said the board.

The board ruled that the Chinese company should have been disqualified at the preliminary stage for failing to comply with the registration and financial requirements in the tenderdocuments.

KPLC has, however, has filed an urgent suit to set aside the PPARB’s decision, claiming the board went beyond its mandate to cancel the contract. Through lawyer Kennedy Ogeto, the company argues that the review board committed serious errors of law when it allowed Magnate Ventures Limited to challenge the tender.

“They lacked jurisdiction to hear the request for review given that the company that raised the complaint did not deposit the mandatory 10 per cent of the contract sum. In any event, their decision was reached beyond 21 days as stipulated in the law,” says Ogeto.

KPLC wants the High Court to quash the entire proceedings before the review board and allow it to proceed with the contract as signed with Hexing Technologies Ltd.

The dispute started on September 1, when KPLC advertised a tender for the purchase of single phase prepayment meters to be undertaken by local manufacturers. The bids were opened on September 14.

Four companies, Hexing Technologies, Anchor and Safety Equipment Limited, Magnate Ventures Limited and AIVEO Limited, applied for the tender.

The three other companies were however disqualified at the preliminary stage and on October 27, KPLC managing director approved the contract. The agreement was that Hexing Technologies would supply the first batch of 900,000 pre-pay meters at cost of Sh4.7 billion.

But Magnate Ventures challenged the contract at the PPARB, claiming that they were unfairly disqualified after KPLC deliberately inserted some clauses to favour the Chinese firm.

According to Magnate Ventures, the successful bidder did not comply with the law and KPLC refused to adhere to provisions that promote accountability and good governance.

“Their action and decision to award the tender to a company that did not qualify in the first place was a mockery of the tendering process in Kenya. The company did not provide its audited accounts and even inflated the cost of the tender yet they won the contract,” Magnate Ventures claimed.