Last mile revenue target fell short by Sh10bn, report says

Elizabeth Keter Cherotich at her house in Nandi, which was connected to electricity under the Last Mile Connectivity Project.  The government missed its projected collection from the Last Mile Connectivity Project by Sh10 billion.

The government missed its projected collection from the Last Mile Connectivity Project by Sh10 billion, the auditor-general has revealed.

The latest performance report by Auditor-General Nancy Gathungu on the implementation of the Sh63 billion project presented in parliament shows that, as at April 30, 2022, the government collected Sh1 billion from the project’s beneficiaries against a target of Sh11 billion.

Revenue from the project was set to repay loans obtained from the African Development Bank (AfDB) and International Development Association (IDA).

Delays in project completion, unrealistic loan recovery period, delays in metering, inadequate project awareness among the beneficiaries, and stolen and fraudulent use of meters are among issues the audit says impacted negatively on the project.

Others are installation of service cables to non-existent homes, inadequate monitoring of the project, unreliable power supply, faulty meters, frequent blackouts and transformer breakdowns.

Delays in completing the project has seen contractors applying for contract extensions of up to five times in some cases.

“The extension of contracts in turn led to the extension of the consultants’ contracts since they were to run for six months post project completion. This led to additional costs in form of office space, rent for storage of materials and transportation costs,” the audit says.

The customer connectivity fee under the project was subsidised from Sh32,480 to Sh15,000 and was meant to create a revolving fund that was to be used to connect more beneficiaries.

Beneficiaries were to pay the connection fee upfront or through a loan whose repayment was to be a deduction of 50 per cent for each electricity token purchased for a period of 36 months. The recovery rate was later reviewed to 30 per cent for each electricity token purchased.

Beneficiaries who opted to pay their connectivity fee through Stima loan were to repay the loan as part of the prepaid tokens.

This means that for every purchase of tokens, 50 per cent of Sh832 was to go towards electricity units and the rest towards repaying the loan for the period, translating to a minimum deduction of Sh416 per month until the loan was fully paid.

Data obtained by the auditors revealed that 10 out of the 606 beneficiaries had paid upfront for electricity connection while the remaining 596 paid through Stima loan.

Out of the 596 beneficiaries who paid through Stima loan, 11 bought electricity tokens above the expected remittance amount of Sh416 per month.

The data shows that  139 beneficiaries spent between Sh100 to Sh200 every month on tokens, 117 between Sh200 to Sh400 a month, 71 spent Sh400 to Sh600 a month, 22 between Sh600 and  Sh800 and 69 spent above Sh800 while 178 beneficiaries were not certain the amount they spent on the tokens.  The project was aimed at increasing access to electricity and supporting Kenya’s course for industrialisation.

It targeted to connect 1,145,957 homes to the national grid and was implemented in four phases with phases one, two, three and four targeting 314,200, 312,500, 314,937 and 181,320 beneficiaries respectively.

Phases one, two and three were initially targeted to connect 941,637 customers but after the design, it was revised to 766,173 customers because some of the targeted beneficiaries had already been connected.

But at the time of the audit, 683,762 beneficiaries had been connected to electricity representing 89 per cent of the targeted beneficiaries.

The project appraisal documents show that contractors were to execute the contracted works within 18 months.

However, none of the contracts were executed within 18 months and none of the phases had been completed and closed as at April 2022, the time of audit.

Also revealed is the fact that two of 10 contracts under phase one were yet to be closed while five out of six and three out of 15 contracts under phase two and three respectively, were still ongoing.