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Kenya Power to undertake legal, governance audits
Kenya Power's offices on Aga Khan Walk, Nairobi. Kenya Power has commissioned an audit into its procurement processes in what is to reveal loopholes that are being exploited to swindle money from the utility.
Kenya Power has commissioned an audit into its procurement processes in what is to reveal loopholes that are being exploited to swindle money from the utility.
The company is seeking to hire a law firm to carry out a forensic audit of its legal and governance structures to check weaknesses that expose the firm to financial losses and lawsuits.
This comes more than a year after the Presidential Taskforce on Review of Power Purchase Agreements (PPAs) revealed shady dealings, especially regarding the signing of lucrative PPAs between the utility and independent power producers (IPPs).
Kenya Power says the audit will include reviewing the company’s procurement processes and procedures, contracting processes and recommending best practices.
“It is necessary for Kenya Power to undertake a legal audit and a governance audit to ensure that its operations align to the law as required including Mwongozo – The Code of Governance for State Corporations,” said Kenya Power.
“The legal and governance audits process shall have an objective of evaluating and reviewing the company’s compliance with statutes within its operating environment with the aim of ensuring that all internal and external stakeholders abide by their responsibilities,” it said.
System losses
The taskforce recommended the utility undertake a forensic audit of all PPAs’ procurement and monitoring and also an audit of system losses within six months.
It was led by businessman John Ngumi and submitted its report to retired President Uhuru Kenyatta in September 2021.
“KPLC to conduct a forensic audit on the PPAs and IPPs to cover the procurement processes that were used (and) identification of beneficial owners,” said the taskforce.
Kenya Power partly instituted reforms at its procurement team leading to the suspension of some 59 workers from the department in November 2021 to pave the way for a forensic audit.
“The goal of the forensic audit, which will be done on the company’s procurement systems, stock and staff, is to enhance the robustness of the company’s supply chain processes,” said the utility at the time.
The company has also raised concerns of losing millions of shillings through dozens of lawsuits filed against it in various law courts within the country forming part of the utility’s contingent liabilities.
Many of the cases are related to breach of contract including disconnection of power supply to defaulters, termination of contracts, trespass, compensation for wayleave, losses arising from blackouts and power surges among others.
“The Directors, based on professional advice and previous High Court rulings, are of the opinion that significant loss may arise from these matters,” noted the company in its latest annual report.
