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Insurers in Sh3bn tender row with KenGen

They are accusing the power generator of changing rules midway

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by The Star

Kenya22 May 2023 - 12:31
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In Summary


  • The Association of Insurance Brokers of Kenya wants the firm to cancel a new tender issued early last month. 
  • KenGen insists that it only had a one-year tender with the 12 insurance brokers 
KenGen offices Ol Karia . EZEKIEL AMING'A

A section of insurance brokers want the Kenya Electricity Generating Company (KenGen) to cancel a Sh3 billion insurance tender floated early last month claiming it breached the existing contract. 

Through the Association of Insurance Brokers of Kenya (AIBK), they say they have a similar existing contract with the power generator for 2022-24 financial years.

"The new tender issued by KenGen on May 3 disregards an earlier one with our 12 members which has been in place since 2022 and is expected to lapse in the coming financial year,'' AIBK  CEO Eliud Adiedo says in a letter seen by the Star. 

But in a rejoinder, KenGen claims that brokers in the pre-qualified list were engaged for service provision, and their contract which ran for a period of one year, is supposed to expire in June 2023.

In a letter seen by the Star, KenGen says the new open tender has some new specifics that fit current needs.

Adiedo on the other hand calls on the power generator to cancel tender number LEG-05-2023 in order to allow the existing contracts to run their full terms to avoid the likelihood of unnecessary court battles. 

The brokers argue that KenGen offered them a two-year tender worth Sh1.5 billion per annum with participants prequalified on a yearly basis hence the advertisement of a new restricted one contradicts the agreement. 

They say conditions in the new tender are inflated hence likely to lock out the existing legitimate players. 

For instance, bidders are expected to have a share capital of Sh30 million, way above Sh1 million stipulated in the Insurance Act. 

It also requires bidders to have at least a market share of eight per cent, a loss ratio of 60 percent and a higher credit rating by a global rating agency.

The new tender also allows international players, to subject the 12 firms that have been offering services to the company to undue competition. 

''KenGen confirms that all brokers that are currently on the pre-qualified were invited to participate in the tender that closed on May 17. They are in no way restricted from participating in the same,'' KenGen CEO Abraham Serem said.

He clarified that the initial tender was only for a year and matures on June 30 and not June 30, 2024, as claimed by the insurance brokers. 

The brokers on the other hand blame the power generator for changing rules midway, saying that they are likely to close shops if the matter is left unresolved. 

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