Ex-Ketraco boss grilled for hours over Sh18b loss
Kakamega governor Fernandes Barasa was yesterday grilled for over 10 hours by detectives from Ethics and Anti-Corruption Commission (EACC) over his role in a dubious multi-billion shilling wind power plant in Turkana.
In the project, the taxpayer is reported to have lost Sh18.4 billion in 2017 and 2018.
Barasa, a former Kenya Electricity Transmission Company (Ketraco) chief executive officer, checked in at Integrity Centre, the nerve of EACC investigations, at around 8:30am, following summons after preliminary investigations linked him to corrupt scheme at the Lake Turkana Wind Power (LTWP) project that was being implemented by Ketraco after delays in the execution led to a loss of Sh18 billion penalties in the form of Deemed Generated Energy between January 2017 and September 2018.
Investigations into the scandal, the biggest to hit the country in recent times, could drag more top government officials and private firms involved, after reports by the National Assembly’s Public Investment Committee and the Auditor General also highlighted possible theft of the billions through deliberate “omissions and commissions” which delayed completion of the transmission line, and invited EACC to probe and prosecute the culprits.
Parliament, after completing its probe forwarded the report to EACC asking them to investigate the Ketraco management on the contract management and implementation for the transmission interconnector, including the failure to secure wayleaves and signing addenda to the TI contract that led to delay in the completion of the line and exposed taxpayers to the delay payments and higher energy bills.
The project, which was a Public Private Partnership (PPP) venture, was a key flagship project of the Kenya Vision 2030 under the energy sector. It was meant to lower energy costs by enhancing power generation capacity and diversifying the energy mix by providing a reliable, complementary electricity supply source to hydropower generation that was impacted adversely by drought.
The project comprises 356 wind turbine generators each with a capacity of 850kW for a total project installed capacity of 310 MW and is connected to the national grid by the 438 km Loiyangalani – Suswa transmission interconnector (TI).
At the heart of the investigations is the circumstances under which a project, where the government initially engaged Lake Turkana Wind Power Ltd and The Consortium of NARI Group Corporation & PowerChina Guizhou Engineering Co. Ltd ended up incurring an additional, avoidable financial burden.
“The omissions and commissions by the relevant government entities involved in the project led to incurred additional cost in the form of Deemed Generated Energy (DGE), totaling to Sh18,499,082,672 paid by the Government and taxpayers,” the committee that was chaired by current Mombasa Governor Abdulswamad Shariff said.
The Ministry of Energy, then under the former Cabinet Secretary Charles Keter, through Kenya Power and Ketraco, and in an uncompetitive procurement, engaged in a public private partnership with Lake Turkana Wind Power Ltd, who were involved in the financing, designing, procuring, constructing, installing, testing, commissioning, operation and maintenance of project.
According to a report by Parliament, in October 2009, the Spanish government offered Kenya a concessionary loan to construct the Transmission Interconnector (TI) with a condition that a Spanish company be awarded the contract to build the transmission line.
The demand by the loaner country, led to cancellation of an earlier approval for LTWP Ltd to build the transmission line under “build, own, operate and transfer framework of the PPP model”.
A steering committee composed of Kenya Power and Ketraco officials assisted by LTWP Ltd undertook a process where M/S Isolux of the Kingdom of Spain was identified as the preferred bidder due to a higher technical and financial evaluation score based on concessionary funding.
However, the implementation of the Tl project faced delays as the negotiation for financing arrangement between the Kenya and the Kingdom of Spain was completed in 2014 and M/S Isolux was given the Final Notice to Proceed (FNTP) with the project on August 13, 2014 despite having signed the contract in December 2011.
In addition, Ketraco failed to meet its contractual obligations by failing to provide access to the wayleave for construction of the transmission line, whereby after entering into a contract with M/S Isolux on December 30, 2011 for a period of 24 months from the date of the FNTP.
The wayleave along the 428 kilometer-stretch, which required the government to compensate affected land owners, was required to be availed to within 210 days from FNTP but documents the Committee established that the process of wayleave acquisition was still ongoing up until February 2018; way beyond the agreed timelines for provision of wayleave access as per Ketraco’s obligations.
“Due to delays in completion of the TI, the GOK accrued Deemed Generated Energy (DGE) penalties claim amounting to Sh18.499, 082, 672 for the period from January 27, 2017 to September 10, 2018. The LTWP plant was ready by January 27, 2017 but the Transmission Interconnector (TI) was not completed until September 10, 2018; almost 19 months later,” Parliament noted.
In accordance with the terms of the Power Purchase Agreement (PPA) and the GOK Letter of Support, LTWP Ltd was entitled to GOK Transmission Interconnector Delay DGE Payments from the date of the plant completion until the TI was operational.
Despite NARI Group Corporation & PowerChina Guizhou Engineering Co. Ltd having emerged as the most responsive out of the five bidders, it was recommended for the award in a process that was undertaken through a specially permitted procurement procedure that was approved by Dr Kamau Thugge, then PS at the National Treasury.