The National Assembly’s Public Investments Committee on Commercial Affairs and Energy on Tuesday put top managers of the Kenya Electricity Generating Company (KenGen) on the spot over questionable recruitment practices, delayed transfer of a multi-billion-shilling asset, and the impairment of key energy infrastructure.
The session, chaired by Pokot South MP Hon. David Pkosing, examined the Auditor-General’s report on KenGen’s financial statements for the years 2020/21 to 2022/23, with lawmakers raising concerns about breaches of the Constitution and internal human resource procedures.
The Auditor-General flagged KenGen for hiring 10 employees, including four graduate engineers, in the 2020/21 financial year without advertising the positions, contrary to its human resource policy and Article 232(1) of the Constitution, which requires openness, fairness, and equal opportunity in public appointments.
A similar recruitment approach was used to hire 28 graduate engineers in the following year, with candidates sourced from the company’s internal human resource database rather than open advertisements.
“The failure to advertise for the positions contravenes both company policy and the values of public service,” the audit report noted.
KenGen’s Managing Director, Mr Alex Wachira defended the decision, saying the move was prompted by the need for quick deployment of staff to international drilling projects in Ethiopia and Djibouti, which had strict timelines.
“We were under pressure to mobilise engineers for the Ethiopia and Djibouti drilling projects. The contract required immediate staffing, and any delay would have led to penalties or reputational damage,” the MD told MPs.
“We used our HR database, which contains applications from members of the public through our website, internship programmes, and our career centre.” he added.
However, committee members questioned the fairness and legality of relying on such a database for recruitment.
Chairman Hon. Pkosing asked the MD to explain what legal provision allowed KenGen to bypass public advertisement.
“What gives you the authority to pick candidates from a database instead of advertising openly? Does this meet the fairness test under Article 232?” he posed.
Ganze MP Kenneth Tungule sharply criticised the policy, terming it “unfair and exclusionary.”
“That policy is very wrong. It locks out many qualified Kenyans who have no idea that such a database exists,” said Tungule. “It only opens room for nepotism. Advertising would not have taken long to get competent candidates.” the MP said.
The MD maintained that the decision was guided by urgency and company procedure, but assured the committee that all current positions are now being advertised internally and externally in full compliance with the law.
MPs also queried the status of a KSh5.3 billion contract asset relating to the Olkaria IV and I AU substations, which KenGen built in 2015 but which have since been operated by the Kenya Electricity Transmission Company (KETRACO).
According to the Auditor-General, the novation agreement transferring ownership of the substations to KETRACO had not been signed at the time of the audit, despite KETRACO already using the facilities to evacuate power to the national grid.
The MD told the committee that the issue had since been resolved.
“The National Treasury officially took over the associated loan and signed the novation agreement as of June 30, 2024. The financial asset has now been extinguished from our books,” the MD said.
Another major concern was the KSh5.9 billion impairment recorded in KenGen’s books, including a KSh2.1 billion full impairment of the Muhoroni Power Station.
The Auditor-General noted that the power plant’s Power Purchase Agreement (PPA) expired in April 2023, and while negotiations for a two-year extension were ongoing, this was not factored into the company’s financial statements.
The MD said the impairment was a “prudent accounting decision”, based on the uncertainty of the PPA renewal at the time.
“Although we have received clearance from the Ministry of Energy for a one-and-a-half-year extension, the process was not concluded by June 2023. Once the extension is finalized, we will review the impairment in line with accounting standards,” he said.
Hon. Pkosing reminded the KenGen team that public institutions must operate within the confines of transparency and accountability, saying the committee would make firm recommendations to Parliament.
“These institutions handle assets and opportunities that belong to Kenyans. They must uphold fairness and accountability at all times,” he said.
The committee is expected to table a report recommending stricter enforcement of recruitment procedures and improved oversight of asset management in state corporations.
