Nancy Gathungu, the Auditor-General, has asked Kenya Power management to explain how it spent Sh2 billion last year without the National Treasury’s approval.
She also questions the suitability of 36 employees hired by the utility firm without due process last year.
Furthermore, she has raised concerns about the company’s irregular procurement of goods and services, stating that the corporation risks being sued by suppliers for violating procurement rules.
Ms Gathungu claims that Sh2,060,000,000 was spent on May 4 using a supplementary budget approved by the company’s board rather than the National Treasury as required by law.
Kenya Power spent Sh860 million on system reinforcement, trace maintenance, and transformer repairs by June 2022, and another Sh1.2 billion on staff cost deficits.
Ms Gathungu went on to say that the state corporation spent Sh167.6 billion during the period, compared to the approved budget of Sh146.2 billion, resulting in a Sh9.9 billion overspend.
Furthermore, instead of the National Treasury’s approved budget of Sh146.2 billion, management adopted the board-approved recurrent expenditure of Sh153 billion.
Several procurement irregularities were identified by the auditor-general. For example, in the tender for the hiring of a generator, the supplier quoted a price of Sh10,846,470, but the tender evaluation committee increased the quoted price to Sh11,036,759.
She also pointed out that the tender for insurance services between Pelican Insurance Brokers Ltd and Kenya Power for Sh651,212 was signed by the General Manager Legal Regulations Affairs and Company Secretary rather than the accounting officer. On December 20, 2021, the letter was signed.
She also cited other irregularities such as contract award and extension, execution of unsigned contracts, use of a restricted tender method, direct procurement of insurance provision, procurement of consultancy services, and procurement of media campaign services.
Concerning employment, the auditor-general stated that a review of staff recruitment during the year revealed the hiring of 36 job seekers to be stationed at Wajir, Garissa, Moyale, Mandera, and Daadab stations.
owever, the recruitment process did not adhere to the established procedures such as advertisement, shortlisting, and interviewing prior to the final appointment. The job offer letters were signed on July 6, 2021, while the application letters sent by the applicants were dated July 8, 2021, implying that the workers were hired before they applied. She also observed Kenya Power’s noncompliance with government employment laws and guidelines, resulting in an imbalanced workforce.
The company employed 9,664 people, with 7,447 men (77 percent) and 2,197 women (23 percent).
Another issue raised by the auditor-general was the company’s failure to file compensation claims with its insurers for lost items.
During that time, the company’s stolen materials were worth Sh8 million, but the insurers only paid Sh42,178 in compensation.
