Sunday, January 15, 2012

I’m innocent, insists KenGen boss



BY JOHN NJIRAINI

After years in the private sector where he acquired vast wealth, and just when he is about to clock 10 years in the public sector, the decorated career of Eddy Njoroge is facing a credibility test.
In what amounts to a polygraph test on one of the most respected corporate titans, a contract revolving around the drilling of geothermal wells is unraveling as a major nuisance to a man considered by many as the ‘cleanest’ head of a semi-autonomous State entity.
Over the past four months, Njoroge has been put on the dock over the manner KenGen has awarded lucrative multi-billion shilling power generation contracts bordering on questionable terms leveled against him by the influential Nairobi Law Monthly.
But last week Njoroge, flanked by the entire KenGen board, came out in defence of his tenure at the helm of KenGen, a job that he has repeatedly said he never wanted but was persuaded to take by President Kibaki back in 2003.
"We have nothing to hide regarding these contracts. We will obey court orders if we are told to provide documents on the projects," he said in regard to a constitutional reference filed by the publication seeking to gain access to all the information and documents in his custody and KenGen.
He added that in all these projects, the only crime KenGen might have committed when awarding the contracts was to try to accelerate the development of geothermal to tackle chronic power shortages.
Complicated process
Granted, contracting for drilling of geothermal wells is a complicated process and KenGen board chairman Titus Mbathi acknowledged as much.
It is these intricate and obscure processes webbed with widespread interests that are proving a major test for Njoroge’s reputation, a man who sits on the board of numerous companies. He is also the chairman of the Nairobi Securities Exchange (NSE) and Telkom Kenya.
Yet in light of revelations around the award of a Sh9.6 billion geothermal wells drilling contract to Great Wall Drilling Company of China and the vigor with which KenGen is defending the contract, the big question is whether he will be left standing by the time the issue wares.
"I do not lose my sleep over this issue. My stay at KenGen is determined by the board," said Eddy.
Achievements
Since he was appointed KenGen Managing Director, there is no doubt Njoroge has transformed the once laggard parastatal to a vibrant and profitable company, with pre-tax profits standing at Sh3.6 billion last year, up from Sh1.7 billion in 2005.
Before he took over, KenGen used to operate in the shadows of its rebranded sister company the Kenya Power and Light Company, but today it’s among the most traded stocks at the NSE, a listing accredited to Njoroge.
While KenGen and Njoroge are tied at the cord, the geothermal contracts could be the razor blade that cut the umbilical cord.
Nairobi Law Monthly claims KenGen flouted procurement laws and did not negotiate for value for money in awarding the contract to Great Wall Drilling Company.
But in its defence, KenGen has been categorical it carried out the tendering, evaluation and awarding of the contract by the rules.
The controversy that is now threatening Njoroge’s career started soon after he was appointed in 2003. Back then, Kenya’s installed capacity stood at a mere 1,142 MW. The number of Kenyans connected to the national electricity grid stood at a paltry 500,000, in national a population of over 30 million.
With the Government determined to resurrect the economy and considering the country had exhausted hydro generation sources, KenGen was forced to explore alternative energy generation sources.
Geothermal was identified as the most ideal because it was clean and, unlike hydro, was not vulnerable to droughts.
The country then set out a "challenging yet achievable target" to exploit and develop the vast geothermal steams in the the Rift Valley.
After extensive studies, KenGen rolled out the process of developing geothermal in 2004 by floating a tender for drilling of six appraisal wells and 15 production wells. The tender only attracted two responses that were disqualified on technical and financial grounds.
KenGen re-advertised the tender in 2006, this time attracting the attention of 12 companies that went ahead to purchase the tender documents although only three submitted bids.
The three companies were Century Resources International of Australia, Great Wall Drilling Company of China and PNOC Energy Development Corporation of the Philippines.
"Great Wall Drilling Company of China emerged as the most competitive of the three firms and won the tender," said Mbathi.
However, claims that the awarded extra 15 wells to Great Wall without tendering could have been the harbinger of the problems now facing Njoroge.
Tender documents
Though KenGen maintained that in the tender documents all the interested bidders were informed of the possibility of contract extension should the appraisal drilling confirm steam availability, the decision is said to have contravened procurement laws. "The decision would only have contravened the law if we did not inform the bidders in the tender documents," said Mbathi, adding that no bidder has ever raised concerns or appealed against the decision.
On this basis, KenGen contends that the awarding of the contract was above board and the issue arising afterwards like constituting a tender committee to award the extra 15 wells and price variations fell with best international practices.

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