A standoff between the Kenya Electricity Generating Company (KenGen) and its financier, the European Investment Bank (EIB), has stalled a key consultancy tender for the Sh32 billion Olkaria VII geothermal project. The High Court has now backed KenGen’s decision to terminate the procurement for the consultancy services, quashing a tribunal’s ruling that had ordered the process to proceed despite the funding stalemate. In a judgment delivered in Nairobi, the court found that the tender could not lawfully continue after EIB declined to issue a mandatory “no objection” letter required under the financing framework.“The question is whether KenGen could reasonably be expected to move forward with the procurement process, award contracts, or implement those contracts without confirmed and adequate budgetary provision and funding. The answer is a big NO,” the judge ruled. The dispute centres on a tender for consultancy services linked to the Olkaria VII geothermal power plant, one of Kenya’s flagship renewable energy projects. The 80.3-megawatt power plant in Naivasha’s Olkaria field project was designed to expand the country’s renewable energy capacity and strengthen power supply.It was formally initiated through feasibility and planning processes beginning in 2022, when KenGen called for studies to support its development. The project gained further momentum with government approvals in 2025, setting it on course for construction and eventual delivery to the grid by 2027. KenGen had initiated the procurement in September 2024, indicating that the contract would be financed by the EIB and governed by the bank’s procurement guidelines. Those guidelines required the financier’s approval at every critical stage, including before award and contract execution.After completing the evaluation and recommending a winning bidder, KenGen sought the EIB’s clearance in January 2026. The bank declined to approve. KenGen then terminated the tender, stating that without the financier’s concurrence, there would be no funds to meet contractual obligations. However, the Public Procurement Administrative Review Board overturned that decision in February 2026 following an application for review lodged by Sintecnica Engineering S.R.L in joint venture with Steam S.R.L, the bidder recommended for award of the consultancy tender. The board had found that KenGen had not sufficiently justified the termination.It ordered the company to proceed with the procurement to its logical conclusion, triggering a court challenge by KenGen. The High Court found that the tribunal misdirected itself on the legal effect of the donor’s refusal and issued orders that could not be implemented. “The financier’s ‘no objection’ was a mandatory condition precedent to award and contract execution,” the court ruled, adding that treating the requirement as optional amounted to a fundamental error of law. “It was not open to the Review Board to direct continuation of a procurement process in disregard of an express financing condition,” the court said.The ruling further held that the tribunal exceeded its jurisdiction by interrogating and overriding EIB’s decision. According to the court, decisions relating to donor concurrence fall within the financier’s contractual mandate and cannot be substituted by a local review body. The judgment also faulted the board for conflating the broader project financing with the specific tender structure. While the Olkaria VII project is co-financed by multiple partners, including KenGen and other development agencies, the consultancy tender was expressly tied to EIB funding. The court said the absence of EIB approval meant the procurement could not legally progress, regardless of other funding sources for the wider project. (ICE NAIROBI)

Fonte notizia: Business Daily