KENYA ENERGY SECTOR RECOVERY PROJECT ENERGY SECTOR RECRUITMENT OF A MANAGEMENT SERVICES CONTRACTOR FOR THE KENYA POWER

AND LIGHTING CO. LTD. CORPORATE RECOVERY PROGRAM Credit No. 3958-KE Project ID No. P083131
EXPRESSION OF INTEREST

The Government of Kenya has received a Credit from the International Development Association and additional financing from other international funding institutions, to help finance the Energy Sector Recovery Project which, in addition to investment components in generation and distribution, provides for a power sector recovery program targeted at improving the performance of distribution and customer service operations. A Transaction Adviser has been employed through the use of the Public-Private Infrastructure Advisory Facility (PPIAF) and is developing a performance based management services contract to help procure a management services contractor. The Kenya Power and Lighting Company Limited (KPLC), a public limited liability company, is the sole licensee for the bulk power purchase, transmission, distribution and supply of electricity in Kenya. KPLC operates 1328km of 220kV and 2,035km of 132kV transmission lines, 600km of 66 kV sub-transmission lines; 5,973km of 33 kV and 15,267km of 11kV distribution lines. The corresponding substation transformer capacities are: 2,462MVA for 220/132/66/33kV, and 1,284MVA for 66/33/11kV distribution. The distribution transformer capacity (33/.4kV and 11/.4kV) in total is 2,801MVA, and is recorded to have increased at the compounded growth rate of 6% over the last five years ending 2002. Customer base is about 690,000 including rural electrification (soon to be separately administered) and 600,000 excluding rural electrification. The compounded growth rate over the last 5 years is about 7% and will almost double with the accelerated connection rate under the Energy Sector Recovery Project. Total system losses are high at about 19%, of which about 5% is accounted for by nontechnical losses. Interruptions are frequent, especially at lower voltages and distribution system voltages fluctuate, causing damages to equipment. Only about 15% of Kenyas total population of over 32 million have access to electricity. Macro-economic conditions and the drought that pervaded during 1999-2000, resulting in power rationing, reduced the electricity sales in 2000. These resulted in substantial losses during the period 1999/20002000/2003. Despite Government intervention KPLCs financial position remains weak, although the substantial losses of the said period have changed to a profit in FY2003/2004. KPLCs total revenue in FY2003/2004 was KShs20.3 billion (US$300 million equivalent approx). To expedite the full recovery of the Company and ensure sustainability of improved performance, KPLC Board intends to procure a management services contractor for a period of two years, with a possibility for extension for a further one year to implement a corporate recovery plan. The Contractor will be a reputable firm with international experience on management service contracting of power utilities, and will be expected to achieve defined monitor-able targets. The Contractor will also be expected to draw up: (i) a takeover and

operational plan for the ignition and execution of the program; and (ii) a succession (handover) plan upon completion of the assignment. Expressions of Interest are now invited from eligible management services firms to act as agent for KPLC in accordance with the provisions of a performance based management contract to be negotiated with the selected firm. Needed track record of relevant experience in managing power utilities with minimum qualifications as follows: 1. At lease five years of management and operation of profitable electric transmission and distribution utilities as owner, concession holder or operator with managerial and operational functions of T & D businesses comparable to KPLC with annual revenue no less than US$300 million equivalent; 2. At least three years of experience on Transmission and Distribution utilities that have improved (i) the affordability and quality of services; and (ii) the financial positions of the businesses;

3. Experience in setting up business units in at least one vertically integrated transmission and distribution company would be an added advantage; and 4. Audited income statements and balance sheets of the last three years demonstrating the firms financial soundness both in terms of liquidity and profitability should also be submitted.
Interested firms must provide information indicating that they are qualified to perform the services (brochures, description of similar assignments, experience in similar conditions, availability of appropriate management staff, etc.). Firms may form a joint venture of no more than three firms or associate with other firms to enhance their qualifications. This Expression of Interest is issued to be able to short list eligible firms to undertake the management contracting outlined above. A firm will be selected in accordance with the procedures set out in the World Banks Guidelines: Selection and Employment of Consultants by World Bank Borrowers, May 2004. One original and fifteen copies of the response to the Expression of Interest should be sent to KPLC Board at the address given below on August 2, 2005 and no later than 10 AM. KPLC Board of Directors Attention: Mrs. Laurencia Njagi, Company Secretary Kenya Power & Lighting Co. Ltd Stima Plaza, Parklands, Nairobi KENYA Telephone: +254 020 32014714 E-mail address: lnjagi@kplc.co.ke Interested firms may obtain further information at the address provided above during office hours from 0900 to 700 hours.