Exit of three Kenya Power directors raises questions

Thursday, June 2nd, 2022 12:18 | By
Kenya Power
Kenya Power. PHOTO/Courtesy

The exit of three Kenya Power board members has left the utility firm with only two independent directors, raising concerns over the impartiality of the board.

Other directors represent government interests. Kenya Power, the sole retail distributor of power in the country, is partly owned by the government with 50.1 per cent shareholding and private investors with a 49.9 per cent shareholding.

KP’s board of directors consists of a minimum of seven and a maximum of 10 directors. It consists of a balance of executive and non-executive directors.

The board announced the unexpected resignation of Elizabeth Rogo, Abdulrazaq Ali and Caroline Kittony-Waiyaki as independent directors of the company to pursue “personal interests” shortly after a workers lobby fingered part of the board over graft.

Their departure comes barely two weeks after the power distributor replaced Rosemary Oduor as the acting chief executive with Geoffrey Wasau Muli, also in an acting capacity. “The company would like to sincerely thank the directors for their commitment and dedicated service and wishes them all the best in their future endeavours,” the notice read in part.

Turnaround measures

Alongside Sachen Gudka and Vivienne Yeda, the trio was appointed as non-executive board members to oversee turnaround measures at the financially troubled utility.

Since 2018, Kenya Power has changed its CEO three times; from Bernard Ngugi to Rosemary Oduor and now Muli.

Commenting on the exits of the independent directors, Samuel Nyandemo, an economist and lecturer at the University of Nairobi said it is tough decisions that are probably making people to quit.

“Those who exited might not be in conformity with what the government wants, a sign of no independence in the power utility,” he said, adding that the government probably wants to push through some ideas which it cannot with the presence of some of the board members.

 The current exits come at a time shareholders expected the power utility to maintain momentum for its Sh3.82 billion net profit recorded in six months to December 2021.

Kenya Electrical Trades and Allied Workers (Ketawu) is on record calling for removal of Rogo, Kittony-Waiyaki, Sachen Gudka, and board chair Vivienne Yeda over claims of tendering malpractices.

Ketawu Secretary-General, Ernest Nadome said they would “mobilise all workers in the energy sector for a nationwide strike” if the four board members do not exit the power utility.

In April, procurement regulator, Public Procurement Administrative Review Board (PPRB) suspended a Sh1.5 billion transformer tender after local manufacturers lamented skewed processes that favoured foreign firms.

“The procurement proceedings are hereby suspended and no contract shall be signed between the procuring entity and the tenderer awarded the contract unless the appeal has been finalized,” KP said after court injunction.

Some of the restructuring processes are also yet to be completed. In January, Kenya power implemented the first tranche of the 15 per cent reduction in power tariffs as promised by the president.

This was to be followed by a further 15 per cent cut by end of March but that is yet to be effected after government’s negotiation with costly Independent Power Producers (IPPs) stalled.

Cost structure

The cost structure within the sector is lop-sided with the suppliers and IPPs consistently ripping profits with high returns on equity while Kenya Power and its consumers underwrite all the risks, expenses and losses,” Kenya Power chairperson Vivienne Yeda said during release of half-year result for period ending December 2021.

In a bid to cut costs, Kenya Power in February announced a massive redundancy action that would affect its 1,962 employees, and will cost the company Sh5.3 billion over the two years of implementation.

Until its profit jumped to Sh3.82 billion in 2021, the utility had been on a downward financial path, posting Sh2.98 billion net loss for the full year to June 2020, its first loss in 17 years that prompted urgent government intervention.

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