Court orders fresh review of KenGen carbon credits tender after appeal ruling

Kenya’s KenGen tender: what happened and why this matters

The Court of Appeal has ordered a fresh review of a contested tender run by the Kenya Electricity Generating Company, KenGen, after finding the procuring entity introduced evaluation considerations during due diligence that were not in the published tender criteria. The dispute involved bidders vying for a contract to supply carbon credits, KenGen as the procuring entity, and courts asked to interpret procurement law. The case attracted public, regulatory and media attention because it raises questions about procurement integrity, the enforceability of tender rules in commercially sensitive carbon transactions, and the governance of state-owned commercial assets.

What Is Established

• The Court of Appeal has ordered a fresh review of KenGen’s tender for carbon credits.
• The court found that new evaluation considerations were introduced during the due diligence stage, beyond the criteria in the published tender documents.
• The dispute arose from a procurement process for carbon credits run by KenGen and involved at least one aggrieved bidder who sought legal redress.
• The ruling rests on interpretation of procurement rules that bar changing evaluation criteria after bid submission and during due diligence.

What Remains Contested

• Whether the procedural change during due diligence materially affected the relative ranking of bidders remains a factual question for the fresh review.
• The appropriate scope of due diligence for complex carbon-credit transactions, and how much discretion procuring entities may exercise, is debated in procurement practice and policy forums.
• Whether the fresh review will require rebidding, re-evaluation, or limited corrective steps is unresolved pending the review and any further court directions.
• Any commercial or reputational impacts on KenGen and affected bidders, while reported, are still being clarified through the review and any subsequent administrative or contractual actions.

Background and timeline

In recent months KenGen issued a tender for carbon credits, seeking to contract suppliers or intermediaries to provide verified emissions reductions or related services. Bidders submitted proposals under published technical and financial evaluation criteria. During the post-bid phase, KenGen carried out due diligence on the top-ranked bidder or bidders. An aggrieved party challenged subsequent evaluation steps in court, arguing the procuring entity added or relied on evaluation considerations that were not specified in the original tender documents. The matter moved through the judiciary and the Court of Appeal directed a fresh review, saying procurement entities should not introduce new evaluation criteria during due diligence.

Stakeholder positions

• KenGen (procuring entity): As the state-owned power generator, KenGen has an interest in securing carbon credits to meet corporate and national climate and commercial objectives. It must now justify the procedural choices it made during evaluation and due diligence in the fresh review.
• Bidders (commercial parties): Bidders who felt disadvantaged say the integrity of the tender ranking was compromised by unadvertised criteria during due diligence. They sought judicial relief to protect the predictability of procurement rules.
• Judiciary: The Court of Appeal acted as an arbiter of procurement law, stressing legal limits on changing evaluation rules once bids are submitted. Its order for a fresh review aims to prevent post-hoc adjustments that could undermine fair competition.
• Regulators and observers: Procurement oversight bodies and civil society observers are watching how the fresh review is executed, whether remedial steps will be adequate, and what precedents the ruling sets for complex commercial procurements linked to environmental markets.

Sequence of events (factual narrative)

1. KenGen published a tender seeking carbon credits and related services with specified evaluation criteria.
2. Bidders submitted proposals and initial evaluation produced a ranking based on published criteria.
3. During post-bid due diligence, KenGen applied additional considerations not explicit in the original tender documents.
4. An aggrieved bidder challenged the process in court, arguing the new considerations were outside the permitted scope.
5. The Court of Appeal concluded that the procuring entity must not introduce new evaluation criteria during due diligence and ordered a fresh review of the tender process.

Institutional and Governance Dynamics

Procurement for complex goods and services, like carbon credits, sits between commercial negotiation and public procurement law. Institutions want to secure value and manage commercial risk, while procurement rules protect competition, transparency and predictability. Tension arises when operational realities, such as verification needs in carbon markets, prompt procuring entities to widen assessment criteria during due diligence. That creates a governance question: how should procurement frameworks allow technical verification without permitting post-hoc shifts that undermine fairness? The answer calls for clearer procedural templates for technical due diligence, stronger pre-bid disclosure, and better institutional capacity to handle specialist transactions within established procurement timelines and criteria.

Regional context: carbon markets, state utilities and procurement norms

Across Africa, state-owned utilities increasingly engage with carbon markets to monetise emissions reductions and meet climate commitments. These transactions often involve complex verification, legal and commercial arrangements unfamiliar to standard public procurement practice. As governments and utilities pursue climate finance, procurement frameworks will be tested by deals that blend commercial negotiation, specialist technical assessment and public-sector accountability. The KenGen decision highlights the need for harmonised guidance, both at national procurement authorities and within utilities, on how to structure tenders for climate-related commodities so technical due diligence is clearly scoped and does not inadvertently alter competitive parameters after bids close.

Forward-looking analysis and policy implications

The Court of Appeal ruling has three immediate implications for procurement and governance in the region. First, procuring entities must publish comprehensive evaluation criteria up front when soliciting complex services tied to environmental markets. Second, regulators should offer detailed guidance on permissible due diligence activities and when they may affect bid rankings. Third, bidders should push for clearer tender documentation and remedies clauses to guard against mid-process adjustments. For KenGen, the fresh review will be a test: how it structures corrective processes and communicates them will shape investor and public trust in future climate-related procurements. For national procurement systems, the ruling is a reminder that legal compliance and technical competence need to work together, not against each other.

Practical steps for procurement reformers

• Mandate explicit disclosure of all evaluation criteria and the scope of due diligence in tender documents for specialist procurements.
• Develop standardised due diligence protocols for carbon credit transactions that define which technical checks are informational versus criteria-affecting.
• Build in independent verification modules and timelines so technical assessments do not become pretexts for changing bid outcomes.
• Strengthen procurement oversight units with climate-market expertise or access to specialist advisors to reduce reliance on ad hoc internal discretion.

Conclusion

The appeal court’s order for a fresh review of KenGen’s carbon credits tender is a governance prompt; it highlights the need to align the commercial demands of climate finance with the procedural safeguards of public procurement. The case matters beyond a single transaction if it pushes for clearer rules on how due diligence for complex procurements is scoped and carried out across the region.

This decision sits within a broader African governance challenge. As state-owned firms increasingly transact in climate and environmental markets, procurement systems designed for conventional goods must adapt. The KenGen case shows how legal safeguards for competitive fairness, institutional capacity limits, and the technical complexity of carbon markets intersect and create demand for clearer rules, specialist oversight, and procedural reform across the region.