Chinese company renews battle for Sh164bn Lamu power plant project

Corporate News

The Lamu coal power plant is expected to increase the country’s power to about 5,000 megawatts from 1,664 megawatts currently. PHOTO | FILE 

By BRIAN WASUNA

A Chinese company has renewed its legal battle for the Sh164 billion Lamu coal power plant project by filing a suit seeking to compel the Public Procurement Oversight Authority (PPOA) to review tender proceedings.

Hebei Construction Investment Group (HCIG) and its Kenyan partner Liketh Investments want the High Court to overturn PPOA tribunal’s decision awarding the multi-billion-shilling project to a consortium of Centum Investments and Gulf Energy.

While HCIG-Liketh holds that its bid was the best, the PPOA tribunal in January dismissed its appeal for a review. HCIG-Liketh says in its fresh application that the procurement watchdog was wrong to allow Centum and Gulf Energy to participate in the process after initially being knocked out at the first round.

The HCIG-Liketh consortium has asked the court to block Centum and Gulf Energy from entering into any agreement with Kenya Power for electricity supply until the matter is determined.

“The petition committee (PPOA’s) misinterpreted the law when it found that the decision by the Ministry of Energy and Petroleum to allow reconstitution of the Centum-Gulf Energy consortium was sanctioned in law.

“In a bid to favour Centum and Gulf Energy, the committee deliberately made factual errors and erred in law by not finding that HCIG-Liketh’s bid was the most responsive,” the consortium says.

READ: Chinese firm signs Sh96bn contract for Lamu coal-fired electricity plant

Centum had initially partnered with Sepco and Thermax, but the consortium was knocked out. The company opted to reconstitute its membership after being re-admitted so as to submit a stronger bid.

It partnered with Gulf Energy, Sichuan Electric Power Construction Company and CHD Power Plant Operation Company.

Martin Kinoti, an engineer with HCIG, says that his firm offered the lowest cost for plant construction at Sh43 billion per year compared to Centum’s Sh46.6 billion.

HCIG-Liketh is also fighting the petition committee’s decision to slap it with Centum-Gulf Energy’s legal bill of Sh181 million.

Centum and Gulf Energy have sued HCIG-Liketh in a separate suit for the legal bill.

The winning bidder will run the coal plant for 25 years from the date of commissioning during which it will recover its investment before handing over the facility to the government. HCIG last month won a tender for developing coal blocks A and B at the Mui basin in Kitui.