Auditor raises concern over power firm’s books

Auditor General has raised concern that for the year ending June 30 2022 Kenya Power has remained in negative working capital position for six consecutive years.

Nancy Gathungu regretted that the parastatal was performing poorly despite the board of directors and management in the past and in the year under review indicating that strategic initiatives had been undertaken to improve the financial results of the company.

According to the audit summary for the year ending June 30, 2022, the company recorded current liabilities of Sh110.4million which exceeded its current assets of Sh54.7billion by a whooping Sh55.7billion.

Gathungu’s damning verdict comes barely months after it emerged that despite years of monopoly, Kenya Power is on the verge of a blackout due to constant outages, slowness in restoring power as well as grossly inflated electricity bills.

“However, these initiatives appear not to have yielded the intended results as at 30 June 2022. This condition along with other matters indicate existence of material uncertainty that may cast significant doubt on the company’s ability as a going concern,” reads the report.

Tariff reductions

The report which was tabled in the National Assembly by Leader of Majority Kimani Ichung’wa also fingers the institution on power losses in the system, the Power Purchase Agreements (PPA) it has entered into with various Independent Power Producers (IPPS), the cost of power in the country, tariff reductions as well as street lighting project. Others are Human resource matters including irregular secondment of staff, un-concluded recruitment process of a managing director, non-compliance with one third basic salary rule, failure to observe guidelines on board of directors meetings, irregular procurement of goods and services such as insurance and consultancy service as well as lack of annual governance audit.

With regards to PPAs, Gathungu noted that a comparison cost of power purchase between Kenya Electricity Generating Company (KenGen) and IPPs shows that Kenya Power entered into expensive contracts with IPPs and was in some instances selling power below the cost price.

She noted that the analysis done by her officer revealed that KenGen supplied a total of 7,911 gigawatt hours or 63 per cent of the total power purchased while the IPPS supplied the remaining 4,742 GWh (37 per cent).

Power purchased

However, she regretted that the cost of the total power purchased from KenGen was Sh38.9billion (41 per cent), compared to purchase of power from IPPS totalling to Sh56.3billion (59 per cent).

This means that it costs Kenya Power an average of Sh3.93 per kilowatt hours of power purchased from KenGen while it cost the company an average of Sh11.87 per KWH of power from the IPPS.

“Analysis of electricity units purchased during the year under review against the cost to purchase revealed a disparity between the cost of power procured from KenGen and the power procured through IPPs,” adds the report.