A procurement tribunal has nullified a KES 8.7 billion fuel supply deal won by French oil marketer Rubis Energy following a 17-minute system hitch by Kenya Power that locked out one of the bidders from the lucrative tender.
Rubis Energy Kenya Plc would have supplied at least 53 million litres of diesel to 30 off-grid power stations in northern Kenya over a two-year period under the contract.
The Public Procurement Administrative Review Board (PPARB), which hears tender disputes, has also ordered Kenya Power to re-advertise the tender and begin a new procurement process.
The board discovered that Kenya Power used an electronic procurement system that locked out Galana Oil Kenya Ltd just minutes before the tender document submission deadline.
The deadline for submitting tender documents, according to the ruling, was November 23, 2022, at 10 a.m. But Galana was unable to access KPLC’s e-procurement system on the said date from 9.42 am to 9.59 am.
Kenya Power was unable to explain the technical failure of the electronic procurement system known as the “KPLC SAP tendering portal”.
“No explanation has been offered as to why Galana Oil Kenya was able to access the KPLC’s e-procurement system on November 22 but was unable to access the same on November 23 between 9.42 am and 9.59 am. This in our view was unfair to Galana,” ruled the board.
According to PPARB, Kenya Power was required to make its e-procurement system open and accessible to all prospective tenderers before the tender submission deadline.
The winner (Rubis) was required to supply and deliver at least 2,216,000 litres of low-sulfur diesel to the northern Kenya stations on a monthly basis.
At current fuel prices, the tender is worth more than KES 8.7 billion, as a litre of diesel costs between KES 165 and KES 170 in the areas where the power stations are located.
The tender was challenged on December 2, 2022, one day before Rubis was officially notified of the win.
Rubis was preparing to submit a performance bond security of KES 120 million to the utility firm as required by the tender documents at the time the award of the tender was challenged.
Rubis has recently expanded its presence and retail network across the country with the acquisition of assets owned and operated by KenolKobil PLC and Gulf Energy Holdings.
The board, chaired by Faith Waigwa, also found that KPLC violated Section 168 of the Public Procurement and Asset Disposal Act by sending letters of intent to award the tender to bidders on December 2, 2022, while Galana’s dispute was still being resolved.
According to the law, once a request for review is filed, the procuring entity must immediately suspend the procurement proceedings. In this case, Kenya Power issued the letters for notification of the tender award on December 2, a day after being informed of Galana’s request for review.
The letters were declared null and void by the board.
While ordering a new procurement process, the board stated that granting an order for KPLC to allow Galana to submit its tender would be contrary to the principle of competitiveness in public procurement because the bidder would have leeway to adjust its price schedule and tender sum if it was aware of the prices quoted by the other bidders.
This is because the KPLC confirmed to the board that the other five tenders were opened in the presence of representatives from the other tenderers.
“This means there is a possibility of the tender sum provided for by the five tenderers being in the public domain and being known to Galana,” said the board.