Kenya: How Govt Paid U.S.$65 Million for 'Non-Existent' Power

President Uhuru Kenyatta presses the switch for power transmission from Loiyangalani-Suswa line during the inauguration of the Lake Turkana Wind Power project on July 19, 2019.

The government paid more than Sh7 billion in penalties to investors behind the Lake Turkana wind power project for electricity that was not reaching Kenyans, in what could be the latest mega scandal.

The penalties were due to the delayed completion of the Sh28.9 billion 430-kilometre high-voltage power line from the Lake Turkana wind turbines to Suswa sub-station in Narok, which is the country's main interchange for electricity coming from different sources.

The contract for the construction of the line was awarded in 2014 to Grupo Isolux Corsan, a Spanish company.

INAUGURATED THE POWER LINE

It was to be completed in 2016, but it was not until September 2019 that President Uhuru Kenyatta inaugurated the power line in Suswa following years of delays after the Spanish company got into financial difficulties.

The wind farm, the largest in Africa, with a capacity of 310 megawatts, enough to power up to one million homes, was supposed to inject the first 50 megawatts into the grid in October 2016 and the whole capacity by July 2017.

What is emerging is that the government spent billions to pay foreigners penalties as well as casual labourers shipped from China to complete the power line after the Spanish contractor closed shop.

Interestingly, the latest tranche of Sh1.16 billion was paid by the government despite recommendations by the National Assembly that no more payments should be made until a special audit into all the payments is carried out.

The amount was approved by the National Assembly during the Supplementary III budget on June 30, 2020.

TIMING QUITE SUSPECT

The timing of the payment by the same MPs who had advised the government not to pay for the energy not used by Kenyans is quite suspect.

Initially, what made the MPs raise eyebrows was the fact that Sh6 billion had been paid to the wind farm investors during the Supplementary II budget for 2017/18, for electricity that was not reaching Kenyans and, therefore, not making the cost of power in the country cheaper.

In efforts to block payment of further penalties, the Energy Committee of the National Assembly, chaired by Nakuru Town East MP David Gikaria, recommended to the Budget and Appropriations Committee that no other payments should be made until a special audit on the wind project and the evacuation line is done.

But it is baffling how the same MPs went ahead to approve the latest payments in total disregard of their own recommendations. Ordinarily, to approve the new payment, the MPs should have overturned their previous recommendations.

COST NOT CLEARLY KNOWN

Mr Gikaria Wednesday confirmed to the Nation that what is raising more issues on the two contracts is the fact that the cost is not clearly known.

"Officers in charge from the government keep on giving us different figures in terms of the cost of the contracts," Mr Gikaria said in reference to the Ministry of Energy and the Kenya Electricity Transmission Company (Ketraco).

"The only thing that will unearth all these issues is the special audit that we have requested as a committee," he said, adding: "We also need an audit on the transmission line and the deemed power that we have been paying for."

From June 2018, the government was to pay an additional penalty of Sh1 billion monthly for delays in connecting the plant to the national grid.

TWO CONTRACTORS

The genesis of the scandal is that the government engaged two contractors for the construction of the transmission line and the wind power plant.

What constitutes careless management of the limited public resources is the fact that the government acceded to the punitive clauses in the contract with Lake Turkana Wind Power that if they were to complete their work before the transmission line is completed, they should be paid penalties.

In what could be a wilfully drawn script to swindle the public coffers, the Spanish contractor would be declared bankrupt, causing unnecessary delays as the government manoeuvred procurement processes for another tender.

In the process, completion time was delayed, exposing the government to the punitive contract clauses with LTWP.

BLOCK PAYMENT

At the time, the Budget committee led by Kikuyu MP Kimani Ichung'wah recommended to the House that any other payment to the LTWP investors be blocked.

He noted that it is inconceivable that the government may have lost so much debt money to finance penalties that did not add value to the economy.

"Bad decisions and careless management of public resources have cost the government a lot of money. This is money that could have gone to connecting hundreds of thousands of poor Kenyans to the grid," Mr Ichung'wah said.

Information before the House committees indicates that more than 1,000 Chinese were brought in as casual labourers.

Whether they left the country after completing work on the line last year remains in doubt.

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