In an exclusive interview with The Standard, KenGen's main oil supplier, Total-Kenya, said it has tendered a three-month notice for withdrawal after its contract with the troubled Triton Oil Company hit a dead end.
The latest twist in the Triton scandal, which rocked the oil industry and involves disappearance of Sh8 billion worth of oil products, however, spells doom to KenGen's operations.
The power utility company, heavily relies on oil to power its thermal plants and could only avert the crisis if it bags a quick deal with another player.
"We have a contract with Triton to supply us with fuel, which we then supply to KenGen.
We gave them three months notice after sensing the danger of not meeting the contract," explained Felix Majekodunmi, managing director Total-Kenya.
The planned withdrawal was aimed at cushioning the firm against huge penalties resulting from any default.
KenGen, however, dismissed the fears saying the company had alternative arrangements, including contracting new suppliers.
"When the supplier gives a notice that he is not able to meet the conditions, what do you do other than ask other interested parties to supply," explained Mr Mike Njeru, KenGen communications manager. He said besides Total, the company also has a running contract with Kenol/Kobil.
KenGen has already advertised a fresh tender for supply of Automotive Gas Oil for its thermal plants.
But industry insiders say they are few candidates that can meet the requirement on short notice. The Standard has learnt the current oil hitch could fuel high electricity bills for consumers as KenGen moves to the market to shop for new suppliers.
"Even if a deal is secured, KenGen must be ready to pay a premium price for the new tender that could translate into higher electricity bills to consumers," said a source who declined to be named.
Majekodunmi revealed Total supplied an average 20 million litres monthly to KenGen at Sh60 per litre mainly supplied to emergency power plants.
The fuel was mainly used to run diesel engines by the Independent Power Producers with Aggreko emergency power producer based in Embakasi in Nairobi leading the pack. -Â Standard