Nairobi — Top managers at the Kenya Electricity Generating Company (KenGen) faced tough questioning from lawmakers over questionable recruitment practices, delays in transferring a multibillion-shilling asset, and impairment of key energy infrastructure.
The National Assembly's Public Investments Committee on Commercial Affairs and Energy, chaired by Pokot South MP David Pkosing, reviewed the Auditor-General's report on KenGen's financial statements for 2020/21 to 2022/23, citing breaches of the Constitution and internal human resource policies.
According to the report, KenGen hired 10 employees, including four graduate engineers, during the 2020/21 financial year without advertising the positions, contrary to its HR policy and Article 232(1) of the Constitution, which mandates fairness, openness, and equal opportunity in public service.
The following year, the company used a similar process to hire 28 graduate engineers, sourcing candidates from its internal HR database rather than through open advertisement.
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"The failure to advertise for the positions contravenes both company policy and the values of public service," the Auditor-General's report stated.
'Urgent staffing needs'
KenGen Managing Director Peter Njenga defended the decision, saying the company faced urgent staffing needs for 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 contracts required immediate staffing, and any delay would have led to penalties or reputational damage," Njenga told MPs.
"We used our HR database, which contains applications from the public via our website, internship programmes, and career centre," he added.
However, committee members questioned the fairness and legality of bypassing 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?" Pkosing asked.
Ganze MP Kenneth Tungule described the policy as unfair and exclusionary.
"That policy is very wrong. It locks out many qualified Kenyans who have no idea the database exists. It only opens room for nepotism. Advertising would not have taken long to find competent candidates," he said.
Njenga maintained that urgency guided the decision but assured MPs that all current vacancies are now advertised internally and externally in line with the law.
Infrastructure asset concerns
Lawmakers also questioned a Sh5.3 billion contract asset related to the Olkaria IV and I AU substations, built by KenGen in 2015 but operated by the Kenya Electricity Transmission Company (KETRACO).
The Auditor-General noted that the novation agreement transferring ownership to KETRACO had not been signed during the audit, despite the substations already supplying power to the national grid. Njenga told MPs that the issue had 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," he said.
The committee also raised concerns about a Sh5.9 billion impairment, including a KSh2.1 billion full impairment of the Muhoroni Power Station, whose Power Purchase Agreement (PPA) expired in April 2023.
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Although negotiations for a two-year extension were ongoing, this was not reflected in the financial statements.
Njenga explained that the impairment was a prudent accounting measure given the uncertainty at the time:
"Although we have since received clearance from the Ministry of Energy for a one-and-a-half-year extension, the process was not concluded by June 2023. Once finalised, we will review the impairment in line with accounting standards," he said.
Pkosing reminded KenGen that public institutions are bound by transparency and accountability, warning that the committee would issue 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.
