Sh1.6 billion paid to three unidentified companies prompts probe at Rerec
According to the audit, the corporation violated procurement laws by paying for services that had not been planned for and whose execution could not be confirmed.
The Rural Electrification and Renewable Energy Corporation (Rerec) is under audit spotlight after it emerged that it paid three unidentified companies a total of Sh1.6 billion for land survey services that cannot be traced to any documented projects or approved budgets.
In her report for the financial year ending June 2024, Auditor-General Nancy Gathungu revealed that the payments were made for work allegedly done in previous years, but Rerec could not provide any evidence of the projects, planning documents, or procurement records to support the transactions.
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“As disclosed in footnote 2, under Note 32 to the financial statements indicates Sh1,600,000,000 paid to three firms for land survey services is subject to investigation,” the audit states.
Gathungu noted that Rerec failed to prove the services were ever included in its procurement plan or budgeted for as required by law, raising serious doubts about the legitimacy of the spending.
“The review of the balance revealed that it was for previous years for unspecified projects undertaken by the corporation. During the audit, no evidence was made available of budgeting for the services, their inclusion in the annual procurement plan, and competitive procurement,” she said.
According to the audit, the corporation violated procurement laws by paying for services that had not been planned for and whose execution could not be confirmed.
“This was contrary to Section 45(3)(a) of the Public Procurement and Asset Disposal Act, 2015, which states that all procurement processes shall be within the approved budget of the procuring entity and shall be planned by the procuring entity concerned through an annual procurement plan,” the report adds.
Rerec owns assets worth Sh115.8 billion and spent Sh11.5 billion on various projects in the year under review.
However, Gathungu flagged several unexplained transactions, with the Sh1.6 billion survey payments standing out for lacking documentation or verification.
“The accuracy, completeness, and validity of the land survey expenditure amounting to Sh1,600,000,000 could not be confirmed,” she said.
The audit also highlighted excess spending on airtime, revealing that Rerec used Sh26.7 million for airtime allowances, exceeding its budget by Sh5.66 million.
The overpayment was in breach of government circulars that set limits on airtime benefits for public officers.
“Review of the expenditure records together with their respective supporting documents revealed that the payments related to airtime that were paid to officers that was way above the prescribed rates in the Circular Ref. No. OP/CAB/15 dated March 5, 2010, on economic utilisation and efficient delivery of telephone services in the public service.
“A recalculation of the airtime benefit paid during the year resulted in excess payment of Sh5,666,100 for the year under review,” the audit reads.
The audit findings have raised alarm over possible financial mismanagement within Rerec, with growing calls for further investigation into how public funds were used.
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