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KenGen cancels and reopens tender for power plant consultancy work
Pylons of high-tension electricity power lines are seen at the Olkaria II Geothermal power plant near the Rift Valley town of Naivasha, Kenya on February 15, 2018.
KenGen has been ordered to cancel a multi-million shillings tender awarded to an Italian firm for consultancy services of the planned Sh31.9 billion ($247.5 million) Olkaria VII geothermal plant.
The Public Procurement and Regulatory Authority tribunal ruled that KenGen unfairly awarded the tender to ELC Electroconsult SPA, which quoted a price of Sh2.69 billion (€18.16 million) compared to another Italian firm, Sintecnica Engineering and Steam SRL (a joint venture) that had quoted a lower price of Sh2.49 billion (€16.79 million).
KenGen will now be required to consider the bids of the two firms afresh. The tribunal also extended the validity period of the tender by a month to July 27 this year.
The State-owned electricity producer is seeking to build the Olkaria VII plant that will have a capacity of 80 Megawatts (MW). The new plant will increase KenGen's total installed capacity for geothermal to 879.3 Megawatts (MW) from the current 799MW.
“The Board deems it fair to re-admit both the Applicant’s and the Interested Party’s tender in the procurement process and to proceed with its evaluation at the financial Evaluation stage, while taking into consideration the findings in the instant Request for Review,” the tribunal says in the ruling delivered on June 11, 2025.
KenGen awarded the deal to ELC Electroconsult SPA in March this year after the firm got a combined score of 91.2 percent compared to the 78.43 percent that the joint venture of Sintecnica Engineering and Steam SRL attained. But Sintecnica Engineering and Steam SRL challenged the outcome, saying they ought to have been given the deal after they quoted a lower price.
Firms that quote the lowest are given preference whenever awarding the contract. They must however fulfil other requirements, such as demonstrating technical ability to deliver the job and also proof of other similar projects previously delivered successfully.
Sintecnica Engineering and Steam SRL had also sought a compensation package of €16.79 million (Sh2.49 billion) or an equivalent of its bid, for what it described as loss of business.
But the tribunal declined the request, saving KenGen from what would have been a major financial hit.
Besides the two, a joint venture of Exergy International SRL & Pozitif Enerji –also Italian firms— had also bid for the deal. Its bid was however declared non-responsive, setting the stage for the two others to battle for the contract.
Olkaria VII is one of the plants that KenGen is targeting to build as it seeks to supply more power and increase revenues besides deepening its position as the single biggest supplier of electricity to Kenya Power.
The others are rehabilitation of Olkaria I that will provide an additional 6MW, uprating of the Olkaria IV and 1AU to produce an additional 40MW and a Public-Private Partnership-backed project Olkaria VI to generate 140MW upon completion.
