Kenya: court-ordered review of KenGen credits tender prompts scrutiny of procurement practice

A Court of Appeal ruling in Nairobi has forced a fresh look at a disputed tender run by the Kenya Electricity Generating Company, KenGen, for carbon credits procurement. In June and July 2026 the court directed a new review after finding problems with how evaluation criteria were treated during the due diligence phase. The parties include KenGen as the procuring entity, bidders who challenged the award, and the appellate court that ordered the review. The case drew media and regulatory attention because it raises questions about fairness, predictable evaluation, and the governance of climate-related transactions by state-linked firms.

Key points

  • The Court of Appeal ordered a fresh review of KenGen's carbon credits tender, focusing on whether new evaluation criteria were effectively introduced during due diligence.
  • The dispute centres on procurement procedure and the limits of a procuring entity's discretion during post-evaluation due diligence.
  • The outcome has implications for how public and parastatal entities structure tenders for environmental commodities such as carbon credits.
  • Regulators, market participants, and civil society signalled interest because the decision affects predictability and transparency in procurement tied to climate finance.

Context and background

Public procurement in many African countries is the main way governments deliver services and bring in private-sector partners. When tenders involve environmental commodities, notably carbon credits, they carry commercial complexity - measurement, verification and third-party due diligence - alongside public-administration rules on fairness and transparency. A legal challenge to a major parastatal's tender therefore tests how courts balance technical procurement discretion against core procurement principles.

Background and timeline

Sequence of events:

  1. KenGen issued a tender to procure carbon credits, with an initial evaluation phase followed by due diligence to verify bidders' claims.
  2. During due diligence, KenGen applied assessment steps aimed at confirming bidder qualifications and the attributes of the credits offered.
  3. One or more unsuccessful bidders challenged the process, arguing substantive new evaluation factors were introduced after the initial evaluation, undermining fairness.
  4. The Court of Appeal reviewed the challenge and concluded procurement entities must not introduce new evaluation criteria at the due diligence stage; it ordered a fresh review to address the procedural shortcomings.
  5. The decision was covered by national media and drew comment from procurement observers, market participants and oversight institutions concerned about implications for carbon-market transactions and procurement norms.

Stakeholder positions

  • KenGen: As a state-linked utility, KenGen handles procurement that mixes technical verification and commercial negotiation. The company says its goal is to secure legally verifiable credits while protecting public interest and value.
  • Bidders and contesting parties: Some bidders sought judicial review on the grounds that post-evaluation changes to assessment parameters undermined a predictable competitive framework, prompting the appeal and the court-ordered review.
  • Judiciary: The Court of Appeal focused on legal standards for procurement fairness and limited the use of discretionary evaluation steps that effectively change how bids are assessed after initial criteria are published.
  • Regulators and civil society: Oversight bodies and transparency advocates emphasised the need for clear rules, especially where public or quasi-public entities transact in nascent markets such as carbon credits.

What Is Established

  • The Court of Appeal ordered a fresh review of the KenGen carbon credits tender.
  • The legal issue concerns whether new evaluation criteria were introduced during due diligence after the initial evaluation stage.
  • KenGen was the procuring entity and multiple bidders were parties to the tender and the legal proceedings.
  • The decision has attracted media and regulatory attention because it bears on procurement norms for carbon-credit transactions.

What Remains Contested

  • Whether KenGen’s due diligence steps were legitimate verification within pre-stated criteria or effectively introduced new substantive evaluation factors.
  • The exact remedial steps required: how a fresh review should restore procedural fairness without unduly disrupting legitimate verification needs.
  • How broadly the ruling will apply to other public tenders that involve technical due diligence and commercial negotiation in environmental markets.
  • How procurement rules should balance operational discretion for technical vetting with bidders’ rights to a stable evaluation framework.

Institutional and Governance Dynamics

This is ultimately about procedural integrity where technical complexity meets commercial discretion. Procurement systems try to combine objective criteria with the ability to verify technical claims. But institutional incentives can push procuring entities to preserve flexibility in due diligence to protect public value or manage reputational risk. That flexibility, if not bounded by clear rules, creates uncertainty for bidders and invites judicial scrutiny. Better tender documents, staged evaluation protocols and oversight mechanisms that define permissible verification activities can reduce disputes while letting procuring entities manage technical risk in emerging markets like carbon credits.

Regional implications and comparative perspective

The ruling resonates across Africa, where state-linked utilities and public agencies are increasingly active in carbon markets and other complex procurement areas. Courts in the region face disputes that force trade-offs between technical verification and procurement fairness. Countries scaling up climate finance instruments should consider harmonising procurement and environmental standards and clarifying dispute-resolution pathways to avoid repeated litigation that delays market development. Donors and multilateral agencies supporting capacity building for carbon projects may prioritise clearer procurement templates and training for parastatal procurement teams.

Forward-looking analysis and recommendations

  • Clarify tender documents: Procuring entities should spell out the difference between objective evaluation criteria and verification activities, and list what due diligence can and cannot change.
  • Standardise staged processes: Use transparent, documented stages with defined outcomes so bidders know how verification will be done and when substantive re-evaluation is allowed.
  • Strengthen oversight and capacity: Procurement oversight bodies should issue guidance specific to environmental commodity tenders, and parastatals should invest in officers with climate-market expertise.
  • Promote dispute-avoidance frameworks: Encourage pre-award engagement and independent technical audits agreed at bid stage to reduce the chance of post-award challenges reaching the courts.

Conclusion

The appellate order for a fresh review of KenGen’s carbon credits tender marks a governance moment for procurement in climate-related markets. The court made clear that technical verification cannot be used to retroactively change competition rules. For governments and parastatals across Africa, the ruling highlights the need to reconcile rigorous due diligence with transparent procurement design to sustain investor confidence, protect public value and support credible participation in carbon finance.

Public procurement is a central governance tool in Africa and increasingly intersects with complex markets such as carbon trading. Judicial limits on post-evaluation discretion are pushing institutions to redesign processes so technical verification and legal fairness work together rather than against each other.

procurement · governance · court · credits · carbon