The Sh174 billion Lamu coal project scandal and the vested interests

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A protracted war of words broke out Monday between Nairobi businessman Chris Kirubi and lawyers Ahmednassir Abdullahi and Fred Ngatia as the Ministry of Energy presented the results of bids for construction of a Sh174 billion coal plant in Lamu.

Drama started unfolding after ministry officials announced that Gulf Energy-led consortium was the winning bidder over two Chinese consortiums led by Shanghai and HCIG.

The two lawyers representing Shangai accused the 14-member tender evaluation committee of favouring the Gulf Energy consortium, which includes Centum Investments chaired by Mr Kirubi.

They held that the Gulf consortium was the highest bidder, with extra costs amounting to over Sh20 billion.

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Other companies in the Gulf consortium include Chinese firms Sichuan Electric Power Design and Consulting Company Ltd (SEDC), Sichuan No. 3 Power Construction Company (SEPCC) and China Huadian Corporation Power Operation Company (CHD).

Mr Kirubi dismissed the claim, saying the winning consortium is largely constituted of local shareholders and executing the project would benefit Kenyans through job creation.

“We cannot accept to be maligned. Ours is a Kenyan-listed company with 3,600 shareholders… as a Kenyan firm, we will not hire lawyers to come here and shout. If you are a Chinese firm, you can go and live in Shanghai,” said an agitated Mr Kirubi.

This statement prompted the two city lawyers to storm out of the meeting room. They held that the evaluation was riddled with fraud and vowed to initiate a legal challenge on the award that is currently awaiting the greenlight from Treasury’s Public Private Partnerships Unit.

It was Mr Abdullahi who kicked off the storm when he questioned the rationale of the tender committee in awarding the highest bidder.

“The difference between Shanghai’s bid and Gulf’s is Sh19 billion a year. This contract will not bring the cost of power down,” he said.  

The lawyers said they would be moving to the PPP tribunal and the High Court to object the tender.

“By rejecting our bid and awarding the highest bidder, we won’t get cheap power but will end up with litigation”, added Mr Ngatia. 
A lawyer for HCIG also said: “Let us meet in court”.

According to Mr Simon Ngure, the chairman of the evaluation committee, Gulf will charge USD7.56 per kilowatt hour of coal power produced for the first one year of the project over the 25 years it will be operational.

Energy principal secretary Joseph Njoroge said the ministry had already sent a recommendation letter to Treasury to award Gulf Energy the contract.

“We have sent a recommendation to PPP that Gulf Energy’s bid was the best evaluated one,” Mr Njoroge said.

By last evening, however, an award letter was yet to be issued, although Centum sent out a statement saying they had won the tender. 

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