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MPs put KenGen on the spot over Sh5.89 billion tied to leasehold land
Pkosing directed the green power generator to submit a comprehensive report on the legal dispute, lease terms, and related delays
Members of Parliament have questioned land dealings by the Kenya Electricity Generating Company (KenGen) after it emerged that out of the Sh6.3 billion raised in a rights issue covering its assets, Sh5.89 billion is tied to leasehold land.
During a meeting of the Public Investments Committee on Commercial Affairs and Energy, which chaired by Pokot South MP David Pkosing, on Tuesday, a 12.39-hectare parcel worth Sh550 million drew particular scrutiny after it emerged that the lease expired in 1991 and ownership documents are missing.
KenGen Managing Director and CEO Peter Njenga, while responding to queries raised by Auditor General Nancy Gathungu, attributed the delay in processing title documents to a long-standing legal fee dispute between Kenya Power and its lawyer, which stalled the title transfer process.
“The title deed was under lien, but the matter has now been resolved. We signed a 50-year lease with the ministry of Lands on March 27, 2023, and received a new certificate of title on April 5,” he explained.
However, Laikipia West MP Mwangi Kiunjuri questioned why the lease term was reduced to 50 years instead of the customary 99 years, demanding the original title deed be presented within two weeks.
Pkosing directed KenGen to submit a comprehensive report on the legal dispute, lease terms, and related delays.
Among other audit concerns raised by Gathungu concerning the financial years 2020/21 to 2022/23, were inconsistencies in financial records and stalled projects, issues that have fueled public frustration over the state power producer’s performance.
Gathungu raised red flags over discrepancies in inter-company balances, noting that KenGen reported receivables of Sh23.58 billion from Kenya Power while the latter reported payables of Sh23.15 billion a difference of Sh 435 million. A similar variance of Sh74.5 million was flagged in dealings with the Geothermal Development Corporation (GDC).
Njenga told the committee that the balances with Kenya Power had been reconciled to Sh22.56 billion as of June 30, 2023, and that the difference with GDC had also been resolved.
Committee members also questioned why the Olkaria IV and AU substations constructed in 2015 and still listed under KenGen’s books at a value of Sh4.59 billion had yet to be officially transferred to Kenya Electricity Transmission Company (KETRACO), despite already being in use.
In response, Eng. Njenga explained that the National Treasury had taken over the debt tied to the substations.
“The Treasury signed a subsidiary loan agreement on June 28, 2024, assuming the €36.9 million European Investment Bank loan owed by KETRACO,” he stated.
Lawmakers were equally alarmed by Sh623 million spent on feasibility studies, particularly the Sh378 million worth of studies conducted between five to ten years ago that have yet to yield any tangible projects.
Pkosing ordered KenGen to submit complete feasibility reports for Meru Wind Phase 1, as well as project details for Ngong I Phase 3 and the Karura Hydropower Project including contractors, turbine suppliers, and cost estimates.
“We must determine if taxpayers are getting value for their money. It is unacceptable for expensive studies to sit on shelves while Kenyans continue to suffer blackouts and exorbitant electricity bills,” Pkosing said.
Nairobi Woman Representative Esther Passaris echoed the public’s growing discontent.
“We are being told of feasibility studies worth millions that haven’t produced anything on the ground. These shoddy deals are hurting ordinary Kenyans,” she said.
“KenGen’s inefficiencies have left many households in the dark and businesses grappling with unsustainable electricity bills. Thousands of families go without power. Companies are shutting down. KenGen must take responsibility and start showing results. We need a reliable, affordable energy supply now more than ever,” added Passaris.
In response, KenGen pledged to fast-track pending projects and enhance transparency.
“Electricity is not a luxury, it’s a lifeline. KenGen must be held accountable for every shilling spent and every light that fails to shine,” Passaris told the state firm’s executives.
