The government has tightened screws on procurement cartels at troubled utility firm Kenya Power as a panel spearheading reforms was ordered to act immediately on a raft of proposals.
The far-reaching proposals follow a meeting that recommended a complete overhaul of dealings at the loss-making company to streamline its operations and reduce the cost of power.
Interior Cabinet Secretary Fred Matiang’i met with the committee on power purchase agreements (PPAs) Wednesday.
“In the coming days, you will notice significant changes in the cost of fuel. We are also targeting significant changes in the cost of power. We are streamlining and bringing about greater efficiency in the manner these organisations work,” Dr Matiang’i said.
The 17-member committee was appointed this week by President Uhuru Kenyatta to fast-track the adoption of proposals made by the John Ngumi-led task force on reviewing PPAs in a race to cut the cost of power by 33 per cent within four months.
Board in charge
The meeting, also attended by Energy Cabinet Secretary Monica Juma, resolved to put the company’s new board in charge of approving procurement tenders, in changes meant to rein in the notorious arm of Kenya Power that is often described as a multibillion-shilling corruption enterprise.
The move is likely to escalate growing tensions between the firm’s management and the new board, which has been accused of micro-managing affairs and overstepping its mandate.
The government has also threatened to sack, arrest and prosecute defiant managers who have been accused of failing to cooperate with the PPAs review task force.
The task force accused senior figures at Kenya Power of frustrating committee members seeking to forensically analyse dealings at the entity before issuing their report.
“The President has given very firm instructions on what needs to be done at (Kenya Power). There’s no room for negotiations on whether you’ll work with the board, the task force or the steering committee. The room is not there,” said CS Juma.
“All stakeholders are on board and the ministry will take the lead in making sure the implementation is undertaken timeously and the effects are felt by … citizens.”
When money is available
Meanwhile, the government has also announced that Kenya Power will now only procure goods and services when money is available. This is meant to prevent the company from borrowing huge amounts of money to finance its growing appetite for new, costly and largely commercially unviable projects.
A security team has also been picked from various agencies to support the committee that will scrutinise the company in search of ways to cut the high cost of electricity.
This comes just days after the government declared Kenya Power a special State project, placing its operations under ever closer scrutiny.
Key on the committee’s plate is undertaking a review and renegotiating with independent power producers (IPPs) to reduce PPA tariffs as recommended by the task force, and overseeing the cancellation of pending negotiations on PPAs.
“We have begun serious discussions on renegotiating the (PPA) agreements with the intention of bringing down the tariffs and the cost of power,” Dr Matiang’i said.
The committee has also been charged with fast-tracking restructuring reforms at Kenya Power to make it more efficient and launch it back into profitability.
Meanwhile, the task force also opened scrutiny on shadowy and powerful owners of IPPs, with a proposal that the company publish the names of the owners in its annual reports for transparency.