Audit reveals how Kenyans lost Sh7 billion in delayed KETRACO power projects
By Maureen Kinyanjui |
Among the most notable losses was Sh417 million paid in fines for the delayed commissioning of a major project aimed at sharing power between Kenya and Ethiopia.
Kenyan taxpayers may have lost Sh7 billion in unwarranted expenditures due to delays in key power transmission projects managed by the state-run company, KETRACO, an audit has revealed.
According to a recent audit report of the company's accounts as of June 30, 2023, the Auditor General, Nancy Gathungu, pointed out that taxpayers incurred over Sh6.9 billion in avoidable costs.
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The audit raises concerns about the lack of value for money in these expenditures, especially considering the circumstances under which the costs were incurred.
Among the most notable losses was Sh417 million paid in fines for the delayed commissioning of a major project aimed at sharing power between Kenya and Ethiopia.
Despite the contractor completing their work in February 2020, the project's commissioning was postponed due to delays in completing related contracts.
Gathungu pointed out that these costs could have been avoided if the associated contracts had been scheduled and managed more effectively.
"The cost would have been avoidable had the associated contracts not been implemented in a staggered schedule," she stated.
In another instance, KETRACO paid Sh85 million in storage and customs warehouse rent for two transformers intended for the Kitale-Ortum project.
Bankruptcy
This project was terminated after the contractor was declared bankrupt, with the Auditor General noting that these expenses could have been avoided had the management reviewed the project's status and taken possession of the equipment earlier.
"The charges would have been avoidable had management reviewed the project status and taken possession of the project assets," Gathungu said.
However, the costs did not stop there. One of the transformers had malfunctioned, and some parts were missing, which further escalated the financial burden.
To mitigate the loss, KETRACO sought an alternative transformer from Kenya Power, adding even more costs.
As a result, the audit concluded that the Sh85.7 million spent on storage costs and custom warehouse rent for the transformers, which had been accruing since 2016, could not be justified in terms of value for money.
Further losses were sustained in the Kenya-Uganda interconnector line project, a crucial power link between the two countries.
This project, which involved a line connecting Lessos in Nandi to Tororo in Uganda and a substation upgrade, faced significant setbacks.
KETRACO was forced to pay over Sh4.5 billion due to the termination of works.
Additionally, equipment meant for the project went missing. According to the audit, 79 drums of phase conductors, worth Sh165 million, were stolen from the site, but no evidence of action to recover these items was provided by management.
The audit also revealed that equipment valued at Sh418 million, intended for the substation, had deteriorated due to exposure to harsh weather conditions, further compounding the financial loss.
Despite these issues, nearly eight years after the contract termination, no new contractor had been sourced to continue the project.
"Management did not provide evidence of action taken to recover the lost items," the audit states.
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