Auditor-General Nancy Gathungu wants the Kenya Power management to explain how it used Sh2 billion last year without the approval of the National Treasury.
She also doubts the suitability of 36 employees hired by the utility firm last year without following the due process.
In addition, she has flagged the company’s irregular procurement of goods and services, stating that the corporation risks facing court actions by suppliers over breach of procurement rules.
Regarding the irregular expenditure, Ms Gathungu says Sh2,060,000,000 was spent on May 4 using a supplementary budget that was approved by the company’s board, instead of the National Treasury as required by law.
Kenya Power used Sh860 million on system reinforcement, trace maintenance, and transformer repairs and another Sh1.2 billion for staff cost deficit by June 2022. Ms Gathungu added that, during the period, the state corporation spent Sh167.6 billion against the approved budget of Sh146.2 billion, resulting in an over-expenditure of Sh9.9 billion.
Further, the management adopted the board-approved recurrent expenditure of Sh153 billion instead of the National Treasury’s approved budget of Sh146.2 billion.
On procurement, the auditor-general flagged several irregularities. For instance, the tender for the hiring of a generator revealed that the supplier had quoted a price of Sh10,846,470 but the tender evaluation committee amended the quoted price to Sh11,036,759.
She also noted that the tender for the provision of insurance services between Pelican Insurance brokers Ltd and Kenya Power for Sh651,212 was signed by the General Manager Legal Regulations Affairs and Company Secretary instead of the accounting officer. The letter was signed on December 20, 2021.
She also noted other irregularities such as the award and extension of the contract, execution of unsigned contracts, use of a restricted tender method, direct procurement of provision of insurance, procurement of consultancy services, and procurement of media campaign services among others.
On employment, the auditor-general said a review of staff recruitment during the year revealed the appointment of 36 job seekers who were to be stationed at Wajir, Garissa, Moyale, Mandera, and Daadab stations.
However, the recruitment process failed to follow the laid down procedures such as advertisement, shortlisting, and interview before the eventual appointment. The job offer letters issued to the said 36 employees were signed on July 6, 2021, while the application letters sent by the applicants were dated July 8, 2021, implying that the workers were appointed to the positions before they applied. She also observed that Kenya Power was non-compliant with the laws and guidelines of government employment opportunities resulting in an imbalanced workforce.
The company had 9,664 employees, 7,447 being male (77 percent) and 2,197 being female (23 percent).
Another issue raised by the auditor-general was failure by the company to raise claims of compensation by its insurers for lost items.
During the period, the company’s stolen materials were valued at Sh8 million but only Sh42,178 compensations were received from the insurers.