Kenya Power risks losing an Sh6 billion loan from the French Development Agency (AFD) to finance the expansion of transmission lines following a row over contracting.
This follows recent cancellation by the procurement watchdog of a Sh4.1 billion tender for construction of substations and power lines under the financing deal signed in 2015.
Kenya Power is seeking to strengthen its transmission lines to ease blackouts and increase customer connections, particularly in rural areas where people still use kerosene-powered lamps for lighting.
The Public Procurement Administrative Review Board (PPARB) terminated the contract last week following a weeklong hearing in which, local contractors accused Kenya Power of breaching the law by locking them from bidding in favour of foreigners.
The watchdog in its ruling said Kenya Power ought to have “unbundled” or divided the tenders into smaller lots to allow the participation of local contractors.
The Nation has since learnt that AFD is not keen on allowing the drawdown of the funds if terms including implementation of the project with qualified contractors are not met.
The revelation came as Kenya Power hit out at the PPARB, for nullifying the multimillion- shilling tender and ordering for its fresh tendering with 45 days.
Company CEO Bernard Ngugi dismissed claims by the watchdog adding that the agency has encouraged them to form joint ventures to meet the threshold for such big projects.
Mr Ngugi told the Business Daily that Kenya Power settled on a list of competent suppliers jointly with the AFD due to capacity demands noting that it was not technically feasible to “unbundle” or “split” the project as ordered by the watchdog due to quality and implementation concerns.
“We are keen on working with the local players and we have been encouraging their participation by building their capacity along the way,” said Mr Ngugi.
