Kenya Power on the spot over dud contract

By John Otini
Friday, November 6th, 2020
Kenya Power. Photo/Courtesy
In summary
    • Ministry of Energy is pushing Kenya Power to pay billions of shillings the company owes power producers.
    • It also wants electricity consumers, especially State agencies’, to clear debts owed to the company.
    • Kenya Power owes KenGen Sh18.85 billion in the year to June 2019, while various customers owed the company Sh23.55 billion.

The office of the Auditor General has revealed a Sh55 million direct procurement deal in the books of Kenya Power in yet another dubious contract deal at the power utility.

Auditors fingered Kenya Power in a contract with a local firm for the provision of creative production and media buying services at a cost of Sh55.89 million in January 2018 without some justifications.

Annual report

“The services were procured through direct procurement contrary to Article 227 of the Constitution and Section 103 of the Public Procurement Act,” the Auditor General said in the 2019 annual report.

“No justification for the direct procurement was availed as there existed other providers of similar services in the market,” the auditor added.

The auditor’s report however does not name the beneficiary firm on the contract.

As Kenya Power prepares for a virtual Annual General Meeting on November 13, 2020, these allegations could feature prominently on the back of dented financials, which show negative working capital.

The firm will not recommend the payment of dividends.

It’s profit before tax fell to Sh334 million in the year to June 2019 from Sh4.9 billion same period the previous year.

Current liabilities exceeded its current assets by Sh70 billion as of June 2019 which means it is struggling to meet immediate needs.

Kenya Power will be electing a new board chairman as Eng. Mahboub Mohamed leaves following the end of his term.

The company is facing criticism’s of overpriced power purchase agreements especially with renewable energy companies that have left the country with expensive power that is not viable for business.

On the other hand, Kenya Power owes KenGen Sh19.4 billion which is due for electricity sales and another Sh200 million in sales of assets.

Kenya Power’s system losses also increased 23 per cent up from 21 per cent meaning that the company loses a quarter of all the power it evacuates. These losses are compensated for by tariff increases to the consumer.

Data from shows that Kenya has the third most expensive electricity tariffs on the continent.

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