@JaindiKisero on #LamuCoalCon: Tender wars should not be allowed to dim our hopes for cheaper power via @DailyNation. Wizi usio wa mambavu... Welcome to power politics. Since the battle for the control of the 960 MW Lamu coal plant is headed to the Public Private Partnership (PPP) Review Board and the High Court, I will now leave it to the judges to decide whether or not there were irregularities in the evaluation of this massive tender. However, I am still at liberty to comment on broad policy issues surrounding a project which, if successful, has the potential to offer the best chance so far of saving the poor electricity consumer in this country from the tyranny of expensive generators. If you look at your electricity bill keenly, you will find that what you pay for fuel exchange rate adjustments and government taxes is way above what you pay for the electricity you consume. This massive project stands to undermine the interests of the incumbent power producers, especially the owners and operators of diesel generators, in major ways. The evidence may be anecdotal, but I can assure you that somewhere behind the scenes, parties with big interests in the incumbent power production regime are praying and trying their best to ensure that the project fails. This is not surprising because the Lamu coal power plant has the potential to throw such entities out of business in Kenya forever. What then are the broad policy issues? MAJOR FLAWS First, I think there are major flaws in the institutional framework governing the so-called PPP projects. Under the current arrangement, the losing bidders are expected to lodge their complaints with the PPP Review Board. The board is supposed to be an independent appeals body mandated to go through the minutes of the tender evaluation committee that disqualified the bidders to determine whether decisions were made transparently and fairly. The puzzle is that one Mr Isaac Kiptanui Bondet, who sat in the evaluation committee in question, was recently gazetted as a member of the PPP Appeals Review Board. Is it fair to allow a party to play judge and jury by hearing an appeal on a decision he was involved in making in the first place? Mr Stanley Kinuthia Kamau, the head of the PPP Directorate, is also the secretary of the overall PPP Committee — the committee of Cabinet secretaries with powers to approve the decisions and processes followed by procurement entities, in this case the Ministry of Energy and Petroleum. It is on record that at one stage, long before the Ministry of Energy had decided to disqualify Shanghai Electric and HCIG of China from the running, the PPP Committee issued a memo disagreeing with the findings of the ministry’s evaluation committee. Yet Mr Kamau also doubles up as a member of the PPP Review and Appeals Board. Where is the transparency in an arrangement that allows individuals to sit on multiple committees? MAINTAIN TRANSPARENCY The cost of procuring or negotiating a PPP eventually falls on the shoulders of the ordinary consumer. These projects are paid for through consumer tariffs and other forms of user fees. Thus, transparency must be maintained at the highest level. One could argue that the risks involved in constructing the coal power plant will be borne by the private sector and that, therefore, the level of public scrutiny should be lower. Yet we all know that sooner or later, these big-talking private investors will be seeking sovereign guarantees from the government. We will soon be hearing the usual lamentations and pleadings about how they need sovereign guarantees to provide additional cover for the power purchase agreements they will be signing with the sole electricity off-taker, Kenya Power. How I wish that at the end of the day, we will have a contractor with a solid financial base, with both the financial and technical capacity to deliver the Lamu power plant within the planned timelines. See just how long it is taking the Lake Turkana wind power project to take off. In future, we should judge the success of principal and Cabinet secretaries, especially those of ministries dealing with infrastructure, by the number of projects they have managed to procure and deliver within timelines. Tender wars, especially where large infrastructure projects are concerned, are fast becoming the bane of the Jubilee administration. Let us pray that the Lamu coal plant does not end up dragging for long in court.
Posted on: Wed, 10 Sep 2014 08:13:31 +0000
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