Electricity producer KenGen has been permitted to proceed with a Sh2.5 billion tender for the sale of 6.38 million carbon credits after the procurement watchdog dismissed an application by a losing bidder.
The Public Procurement Administrative Review Board (PPARB) dismissed an application for review filed by Sintmond Group Ltd, saying that given the magnitude of the subject tender and the substantial financial value involved, the firm bore the obligation to demonstrate its capacity to undertake a contract of such a scale.
Carbon credits, also known as carbon offsets, are permits that allow owners to emit a certain amount of carbon dioxide or other greenhouse gases.
Sintmond’s bid for the sale of Certified Emissions Reductions was disqualified after failing to provide independent evidence of successful performance in previous contracts of comparable value and complexity, despite being allowed to do so.
“Accordingly, we find that under this ground, the Respondent (KenGen) was justified in concluding that the Applicant (Sintmond Group Ltd) lacked the requisite experience and capacity to handle the present tender.
Sintmond Group had submitted the highest bid offering $23,207,359 (about Sh2.99 billion).
The board said the omission contravened the requirements of Clause 14 of the bid data sheet, which obligated tenderers to demonstrate capacity and reliability through verifiable past performance.
The review board said the absence of such references reasonably made KenGen conclude that the company lacked the demonstrated capability to execute a contract of the magnitude contemplated under the tender.
The electricity-generating firm said Sintmond Group Ltd did not demonstrate any prior experience or capacity to manage a contract of similar magnitude, and when considered against the backdrop of the earlier terminated tender, the firm’s performance history did not inspire confidence in its ability to deliver.
“Accordingly, we are persuaded that a reasonable and prudent procuring entity, faced with the same set of facts, would have reached a similar conclusion that the Applicant failed to demonstrate sufficient ability/capability to perform the tender,” the board said.
KenGen advertised the bids in May, asking bidders to demonstrate previous successful participation in emission reduction trading or transactions of CERs or Voluntary Emission Reductions, which would form part of the evaluation criteria.
Three tenders were received- Munja Trading Limited in a Joint Venture with Marwil Energy Holding AS, Kyoto Network Limited, and Sintmond Group Limited.
Upon conclusion of the evaluation stage, the tender committee found the joint venture responsive.
The evaluation committee determined that Munja Trading Limited, in a joint venture with Marwil Energy Holding AS, had submitted the highest evaluated tender price, cumulatively amounting to $19,637,758 (2.53 billion), and was therefore ranked as the best evaluated bidder.
Sintmond Group challenged the decision, arguing that the procuring entity improperly relied on extraneous and undisclosed due diligence criteria to disqualify it from the tender.
Last month, the board had directed KenGen to do the bidding process afresh, citing irregularities in the earlier process.
The electricity-generating firm did as directed and settled on the same company, forcing Sintmond Group to file another application for review.
The firm complained that it was condemned unheard, and KenGen relied on matters that were never part of the tender process, in breach of the Fair Administrative Action Act.
And after hearing the case, the board still dismissed the application, stating that despite being aware of the importance of demonstrating past experience, the firm still failed to furnish the evidence.
“The only reasonable inference to draw from this omission is that the Applicant did not possess credible proof of past performance to support its capability to execute the tender,” said the board.
