CS Ndung’u calls regional ministers’ crisis meeting over EADB

National Treasury & Economic Planning Prof Njuguna Ndung'u before the Senate Standing Committee on Finance and Budget on the allocation of Revenue Bill (CARB), 2023 at the County Hall, Nairobi County on May 17, 2023.

Treasury Cabinet Secretary (CS) Njuguna Ndung’u has summoned a crisis meeting of regional Finance ministers to deliberate on the term of East African Development Bank (EADB) director general Vivienne Yeda.

The meeting also seeks to get answers over questionable expenditure of Sh380 million ($2.8 million) incurred in legal fees.

Prof Ndung’u told the National Assembly’s Finance committee that he was set to dispatch a letter to the Finance Ministers for Tanzania, Uganda and Rwanda who are shareholders of the EADB.

“I find myself in a tight legal boundary. Tanzania, Uganda, Rwanda and Kenya have equal shareholding in this bank,” Prof Ndung’u said.

“All queries of the bank are resolved under the East African Community (EAC) Treaty and the Articles of Association. The queries are required to be raised by member countries under the EAC Treaty.”

Legal perspective

Matungulu MP Stephen Mule sought an explanation from Prof Ndung’u on the expenditure of Sh380 ($2.8 million) by EADB in legal fees.

Prof Ndung’u appeared before the National Assembly’s Finance and Planning committee to shed light on the operations and the directorship of the regional lender on Tuesday.

“I will write to shareholders within the bank. From a legal perspective, we cannot discuss this bank in public but we will address the issues through the EAC treaty. I will share the responses with the committee,” Prof Ndung’u said.

“We will sit with the ministers of the four countries and discuss the issues raised by Mr Mule. We are bound by the law,” he said.

Committee chairperson Kuria Kimani asked Prof Ndung’u to urgently address the issues raised by Mr Mule and file a report.

Mr Mule had raised the red flag over the payments of $2.8 million by the EADB to foreign law firms in the past six years.

He wants the Treasury to explain the circumstances that led to the payout of over $2.8 million in legal fees between the year 2014 and 2020.

He also sought to know the terms of the tenure of Ms Yeda, the Director General of EADB.

The Treasury is also required to explain the reasons why shareholders of EADB, in particular Kenya, which is the largest shareholder, have not been paid any dividends during the tenure of the current Director-General.

“Could the Cabinet Secretary state the measures being taken by the Ministry to safeguard Kenyan taxpayers’ money held at the EADB at the headquarters in Uganda?” Mr Mule asked.

Largest shareholder

Kenya is the largest shareholder of EADB, which was founded in 1967 as one of the institutions of the defunct East African Community.

The regional bank is owned by the governments of Kenya, Rwanda, Tanzania, Uganda, the African Development Bank (ADB) and NCBA Group, among other shareholders.

Last year, Parliament put Ms Yeda on the spotlight after the Energy committee opened an inquiry into the high cost of power occasioned by Power Purchase Agreements (PPAs) signed between Kenya Power and Independent Power Producers (IPPs).

The inquiry centered on the power purchase agreement between Kenya Power and Lake Turkana Wind Power (LTWP).

The EADB, in 2014 co-financed the Marsabit based LTWP plant, the biggest IPP and the second largest supplier of power to Kenya Power after KenGen.

 At the time, Ms Yeda was EADB’s Director General having been appointed in June 2009.

Ms Yeda was in 2020 appointed as director and chair of the Kenya Power board, two years after LTWP started billing Kenya Power for deemed generated power (DGE).

LTWP demanded payment from the government DGE due to delays in connecting the wind farm to the national grid.

Taxpayers paid Sh18 billion penalty that arose from a 381-day delay in completion of the 428km high-voltage power line from Marsabit to Suswa sub-station in Narok, the main interchange for power from different sources.

LTWP commissioned its 310 megawatts power plant on January 27, 2017 but the government, which built the evacuation line did not complete the works until September 24, 2019.