Auditor-General, Nancy Gathungu, has raised concerns about a potential Sh1.6 billion loss in public funds related to a fuel-testing tender.

The issue stems from the Energy and Petroleum Regulatory Authority's (EPRA) decision to withdraw a contract awarded to two qualified local firms for Sh546 million and subsequently award it to a sole bidder for Sh2.3 billion, a price more than four times higher.

According to the audit report, Epra initially received bids from four companies for petroleum fuel marking, testing, and monitoring services in June 2023.

Two firms emerged as the frontrunners, meeting all technical and financial criteria.

The Auditor-General's report states, "a professional opinion issued on 20 December 2021 by the head of procurement recommended the award of the tender to the two firms, which was approved by the director general three days later."

However, the report reveals a surprising turn of events. Just a week later, Epra terminated the tender process.

The Public Procurement and Regulatory Authority (PPRA) reportedly directed EPRA to rescind the procurement and seek authorization "to use a specifically permitted procurement method for the service provider."

Epra then obtained approval from the National Treasury in May 2022 and issued a new tender to a single company in June 2022.

The audit, however, criticizes EPRA for failing to justify this shift.

Regulations require such a change in procurement method to be demonstrably in the public interest or for reasons of national security. The audit found no evidence to support this claim.

EPRA defended the sole bidder, stating it possessed the necessary technological capacity. However, the audit faults EPRA for not including this requirement in the original tender documents.

Additionally, despite awarding the contract in July 2022, there is no evidence the IT system, supposedly a key factor, was even implemented by March 2024.

"The IT system component was not part of the initial tender requirements," Gathungu pointed out.

"This constituted a change in scope that would call for an addendum to the tender documents prior to the closing date."

The audit further highlights the irregularity of introducing this new requirement after the evaluation process was complete.

The significant price discrepancy is another point of contention. The initial tender would have cost Sh546 million, whereas the sole-sourced contract came in at a staggering Sh2.356 billion.

The audit also flags concerns about the contract being signed just two days after the acceptance letter, bypassing the legally mandated 14-day waiting period.

This report by the Auditor-General raises serious questions about the transparency and justification behind EPRA's handling of the fuel testing tender.

The potential loss of Sh1.6 billion in public funds necessitates a thorough investigation to ensure proper procurement procedures are followed in the future.