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Agency to purchase electric poles for Sh60,000 a piece


Economy

Agency to purchase electric poles for Sh60,000 a piece


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Technicians repair power lines. FILE PHOTO | NMG

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Summary

  • The Rural Electrification and Renewable Energy Corporation (REREC) is seeking Sh60,000 a piece electricity poles in a tender targeting local firms.
  • The company has closed tenders for 15,000 composite poles that will cost taxpayers Sh900 million to procure.

The Rural Electrification and Renewable Energy Corporation (REREC) is seeking Sh60,000 a piece electricity poles in a tender targeting local firms.

The company has closed tenders for 15,000 composite poles that will cost taxpayers Sh900 million to procure.

“Supply of 10m composite poles –open to local manufacturers only. Within Seven (7) Months after Contract signing,” the tender documents read.

The deal brings to focus lucrative tenders that has attracted a narrow range of bidders and tight timelines for delivery within seven months.

Insiders say the poles cost three times the value of concrete poles and six times the cost of wooden poles.

Wooden poles are way much cheaper with an estimated cost of Sh8,787 and a profit margin of Sh2,240, transport to supplier at Sh700 per pole and administration costs of Sh273.

The Sh8,787 production cost is arrived at considering pole price from farmers is at Sh3,599, Sh50 felling cost, Sh300 for skidding, Sh200 for loading, Sh1,000 for transport to the factory, Sh100 offloading, Sh100 debarking, Sh100 for pole dressing, Sh60 for drilling, Sh20 for tagging, Sh30 for gang-nailing, Sh1,848 for pole treatment, Sh200 for loading, Sh700 for transport, Sh180 for binding them and Sh100 for cess.

Electricity supply poles have become lucrative business as Kenya moves to replace traditional wooden poles with alternatives like concrete.

Kenya Power has grown its annual demand for poles to 450,000 issuing tenders worth Sh5 billion yearly under the money-minting National Electrification Programme.

The decision by the rural electricity supplier to go for composite poles is opposed to Kenya Power’s plan, which is retreating from expensive concrete poles.

Last year Kenya Power reverted back to wooden poles expressing interest in buying eucalyptus trees for its electricity supply projects. It sought 76,657 treated wooden poles from local firms at an undisclosed cost to connect more consumers to the national grid.

The tender pointed to a U-turn from phasing out wooden poles in favour of concrete types.

It came days after Kenya Power also announced search for commercial tree farmers to supply mature logs that will be processed into electricity poles.

The development was good news to eucalyptus farmers who have incurred losses running into millions of shillings over the years after Kenya Power and the Rural Electrification Authority scaled down demand for wooden poles to reverse deforestation trends.

Farmers with 10-year and above plantations growing on more than an hectare should show interest by October 31.



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