Audit: State lagging behind on Last Mile loan recovery
The government has only recovered Sh1 billion out of the targeted Sh11 billion from individuals who benefitted from the Last Mile Connectivity project, a special audit report shows.
Report from the Auditor General Nancy Gathungu raises concerns that the Ministry of Energy and Kenya Power, which were implementing the Sh63 billion project, set unrealistic loan recovery periods.
Project had targeted to connect 1,145,957 beneficiaries to the national grid between 2015 and 2020.
Implementation was to be done in four phases, with Phase I, Phase II, Phase III and Phase IV targeting to connect 314,200, 312,500, 314,937 and 181,320 beneficiaries, respectively. “As at April 30, 2022, a total of Sh1 billion against a target of Sh11 billion had been collected from beneficiaries,” the report
According to the audit that was tabled in the National Assembly, beneficiaries who opted to pay electricity connectivity fee through Stima Loan were to repay the loan as part of the prepaid token where for every purchase, 50 per cent of the amount was to go towards electricity units and the rest towards repaying the loan for a period of three years.
However, Gathungu has raised concerns that data obtained through interviews with beneficiaries revealed that only 10 out of the 606 beneficiaries had paid upfront for electricity connection, while the remaining 596 paid through Stima Loan.
Out of the 596 beneficiaries who paid through Stima Loan, only 11 per cent bought electricity tokens above the expected remittance amount of Sh416 per month due to low socio-economic status, thereby negatively affecting their purchasing power.
Audit has also fingered Kenya Power over installation of service cables to non-existent households, stolen and fraudulent use of meters, frequent blackouts and transformer breakdowns, unrealisable power supply, faulty meters as well as inadequate project awareness to beneficiaries.
Others are delayed project implementation and metering process, delays due to termination of contract and way leave disputes, delays in issuance of letters of credit for importation of materials, delays in processing tax exemptions approvals and import clearance.
Appraisal documents
On project implementation, report states that while the expected commencement dates for Phases I, II, III and IV were December 2014, September 2015, October 2016 and June 2018, respectively, the project appraisal documents stated that contractors were to execute the works within a period of 18 months.
However, none of the contracts were executed within the 18 months and none of the phases had been completed and closed as at the time of audit in April 2022. Delay in project completion has resulted in contractors applying for contract extension up to five times in some cases thus resulting in additional costs in the form of office space, storage materials and transportation costs.
“Review of documents and interviews with key personnel revealed that two (2) out of ten (10) contracts under Phase I were yet to be closed, while five out of six and three out of 15 contracts under Phase II and Phase III respectively, were still ongoing. Additionally, the Project progress report dated April 2022 indicated a completion status above 69% for all the phases,” adds the report.
On installation of service cables, audit raises concerns that physical verification revealed instances where Kenya power had installed service cables and meters on parcels of land where owners were yet to construct houses.
“The audit established that KPLC erected temporary boards on the parcels of land and mounted electricity meters on the boards. The mounted meters were lying idle and were exposed to vandalism. Further, KPLC could not recover the connection fee because there was no power consumption,” the report.
