The Effect of Public Procurement Process on Cost of Generating Power in the Energy Sector in Kenya: a Case Study of Kenya Electricity Generating Company

Abstract

The study’s main purpose was to ascertain the effect of public procurement process on cost of generating power in the energy sector in Kenya with specific reference to Kenya Electricity Generating Company (KENGEN). Specifically, the study resolved in establishing the effect of public procurement process on cost of generating power in KenGen and to establish measures/actions taken by Kengen to manage costs in their procurement dealings. The study adopted both case study and descriptive research designs. The population under study was all the procurement employees of Kengen. A sample of 134 was taken consisting of the procurement department employees. Data was collected using a structured questionnaire. The data was analyzed using descriptive statistics, regression analysis and frequencies and percentages. The study established that the procurement process has a significant effect on the cost of generating energy at Kengen. It was evident that the three variables that constituted the procurement process: procurement planning, supplier selection and tender process explain 56.2 percent of the cost of generating energy. This implies that as far as energy generation costs are concerned, the procurement process has a significant percentage of the costs originating from it. It was further established that Kengen has taken a number of measures aimed at reducing costs in its procurement activities. These measures include: commitment to continuous improvement by the organization, frequent supply chain performance measurement in order to identify areas of improvement in procurement, ensuring that there is reuse and recycling of materials to avoid wastage and spending money on fresh materials when it is not necessary among others.