- The contractors have insisted that the bulk of materials used to make equipment and items such as transformers are imported.
- There are fears that the move would negatively impact on local manufacturers.
Kenya power suppliers have suffered a staggering blow after the utility firm orders them to submit their bids only in Kenya shillings.
Some suppliers had petitioned Kenya Power to be allowed to price their tender bid prices in dollars to cushion themselves against the Kenya shilling which has been on a free fall against the US dollar.
The contractors argued that the bulk of materials used to make the items such as transformers are imported.
“Over 90 per cent of raw material inputs in the manufacture of transformers are imported from overseas and payments are done in US dollars. Considering the current trend where the Kenya shilling is losing ground against the US dollar and further taking into account that the contract will run for two years, it is not possible to effectively hedge against the US dollar,” said one of the petitioners.
“We request that KPLC allows us to submit prices in US dollars or any of the acceptable major international currencies and KPLC to effect payment in the currency of our bid,” added the plea.
The electricity distributor, however, rejected the dollar pricing request by its suppliers.
“All local suppliers will be bidding only in Kenyan shillings because they buy most of their materials locally so there is no need for them to bid in foreign currencies,” Kenya Power finance manager Stephen Vikiru told the Nation.
There are fears that the move would negatively impact local manufacturers of equipment such as transformers, meters, cables, conductors, wires, and other supplies.
But Kenya Power said it could look into making some exceptions.
“For suppliers of specialised equipment we will make an exception because some of the equipment has to be bought from abroad and are paid for in foreign currencies,” said Vikiru.
Suppliers have been bidding in US dollars to cushion themselves from massive Kenya shilling volatility.
Kenya power says its total monthly average use of foreign currency is Sh6.37 billion and Sh2.71 billion.
The volatile Kenya shilling has put pressure on importers of equipment, machinery, fuel, food, electronics, and other products amid a Forex shortage.
The Kenya shilling was on Tuesday trading at a high of 127.29 against the US dollar.