Kenya Power’s top management was on Tuesday put to task by National Assembly's Public Investments Committee on Commercial Affairs and Energy (PIC-CAE) over serious audit concerns highlighting financial distress, procurement breaches, and governance failures at the utility company.
The committee, chaired by David Pkosing (Pokot South), scrutinized the Auditor-General’s report for the financial year ending June 2022, which painted a worrying picture of the company’s operations.
According to the report, Kenya Power’s current liabilities surpassed its current assets by sh55.7 billion, the sixth consecutive year the company has recorded negative working capital, pointing to deep liquidity problems.
The Auditor-General warned that the persistent shortfall could threaten Kenya Power’s ability to remain operational, raising fears about the sustainability of the country’s main power distributor.
Equally troubling to the lawmakers was the wide cost variation between power supplied by KenGen and Independent Power Producers (IPPs). The report showed that while KenGen provided 63 percent of electricity at Sh38.9 billion, IPPs accounted for 37 percent but at a higher cost of Sh56.2 billion.
This means electricity from IPPs cost almost three times more, prompting MPs to question why Kenyans were still bearing the burden of expensive power purchase agreements.
The committee also questioned a 137 percent increase in fuel costs and procurement irregularities, including the direct hiring of generators for Mandera and Lodwar at a cost of SDh185 million without competitive tendering. Kenya Power’s management defended the decision, citing urgency and security challenges in the two areas.
Other audit concerns included insurance contracts that exceeded approved budgets and consultancy services that did not comply with procurement laws.
The report also revealed unapproved secondments of 36 staff from ministries and agencies, and the prolonged delay in appointing a substantive Managing Director despite the completion of the recruitment process.
Additionally, more than 2,600 employees were found to have received less than one-third of their basic salary, contrary to the Employment Act of 2007.
Appearing before the committee, Kenya Power CEO Dr. Joseph Siror said the company had taken steps to address the issues raised, including improving reconciliation of inter-agency accounts with KenGen, KETRACO, and REREC, and enforcing stricter procurement oversight.
While acknowledging the company’s recent reforms, Pkosing said several audit issues remained unresolved. He noted that despite the reported progress, many Kenyans continue to endure unreliable and expensive electricity.
“It is saddening that the board held 62 illegal meetings. Those who participated must refund the money they received,” said Pkosing, stressing that accountability should apply to all public officers regardless of rank.
Nyeri Town MP Duncan Mathenge said that unless the company satisfactorily addressed the audit issues, the committee would recommend that board members personally refund any irregular payments made. He also described some of the board meetings as “illegal and unethical,” citing conflicts of interest.
Laikipia East MP Mwangi Kiunjuri said it was unacceptable for an organization of Kenya Power’s stature to hold irregular board meetings, adding that the committee should act firmly to ensure Cabinet and Principal Secretaries avoid similar practices in future.
In response to the lawmakers’ demands, Dr. Siror requested more time to submit additional documents clarifying some of the raised concerns.
Pkosing said the committee would summon Energy Cabinet Secretary Opiyo Wandayi and Treasury Cabinet Secretary John Mbadi to address audit issues that touch on government policy and financial oversight.
Members of the committee also expressed alarm over the continued rise in electricity prices, saying the inefficiencies and policy loopholes within Kenya Power continue to burden consumers.
“The Committee will not allow inefficiency and policy loopholes to continue burdening Kenyans through inflated power costs,” said Pkosing, reaffirming Parliament’s commitment to uphold transparency and accountability in all state corporations.