The Rural Electrification and Renewable Energy Corporation (Rerec) is facing fresh scrutiny after Auditor-General Nancy Gathungu raised concerns over a Sh1.6 billion payment made to three unnamed companies for land survey services that lack any supporting documentation.

In her audit for the financial year ending June 2024, Gathungu disclosed that Rerec made the payments, citing work allegedly done in previous years, but failed to provide evidence of the projects surveyed or even proof that the services were planned or budgeted for.

“As disclosed in footnote 2, under Note 32 to the financial statements indicates Sh1,600,000,000 paid to three firms for land survey services is subject to investigation,” the Auditor-General stated.

Her report further questioned the validity of the transactions, noting that there was no evidence to show the expenditure was part of Rerec’s annual procurement plan or that the contracts followed a competitive procurement process.

“The review of the balance revealed that it was for previous years for unspecified projects undertaken by the corporation. During the audit, no evidence was made available of budgeting for the services, their inclusion in the annual procurement plan, and competitive procurement,” Gathungu added.

She said the agency acted in breach of procurement laws by committing funds to unplanned activities that cannot be verified.

“This was contrary to Section 45(3)(a) of the Public Procurement and Asset Disposal Act, 2015, which states that all procurement processes shall be within the approved budget of the procuring entity and shall be planned by the procuring entity concerned through an annual procurement plan,” the audit reads.

In total, Rerec spent Sh11.5 billion on various projects in the year under review and owns assets worth Sh115.8 billion. However, Gathungu flagged multiple questionable transactions, among them the massive Sh1.6 billion payment for the survey services whose accuracy and completeness could not be confirmed.

“The accuracy, completeness, and validity of the land survey expenditure amounting to Sh1,600,000,000 could not be confirmed,” she noted.

The Auditor-General also faulted the corporation for overspending on airtime, revealing that Rerec used Sh26.7 million for airtime purchases in that year—Sh5.66 million above the approved budget.

While the airtime was meant for use by Rerec officers, the audit revealed that the agency violated public service rules by paying rates beyond those set in an official government circular.

“Review of the expenditure records together with their respective supporting documents revealed that the payments related to airtime that were paid to officers that was way above the prescribed rates in the Circular Ref. No. OP/CAB/15 dated March 5, 2010, on economic utilisation and efficient delivery of telephone services in the public service.

“A recalculation of the airtime benefit paid during the year resulted in excess payment of Sh5,666,100 for the year under review,” the audit states.

The audit findings have raised concerns over the integrity of Rerec’s financial management and triggered calls for a full investigation into the mysterious payments.