Tenderpreneurs, rogue officials behind artificial transformer crisis at Kenya Power

An intricate web of cartel controlled by shadowy tenderpreneurs allegedly working in cahoots with senior rogue managers at the national power utility firm, Kenya Power is linked to the latest artificial shortage of transformers aimed at facilitating multi-billion contracts for supply of the said crucial accessories set to be done through restricted tendering and single sourcing, insiders have now revealed.

Investigations by The Informer have established that at least five private companies are angling for what will potentially turn out as one of the latest brazen heist and premeditated looting spree reminiscent of billions of shillings of taxpayers’ money lost through stockpile of unprioritised purchases at the same institution some covering up to 8,050 years as exposed by us in May last year.

“Plans are complete to have already silently selected firms supply 2,144 new transformers through restricted tendering process.” Our source disclosed.

The materials are now lying unutilised and could soon be declared obsolete.

The purchases were made without requisitions by the user departments to a tune of over Sh8billion.

Some of the materials itemised as; Clamp suspension (11kV ABC) bought at Sh14.6million has been quoted at stock cover of 8,050 years.

From the inventory records seen by The Informer, other items booked under material code 174827 were purchased at Sh690million were assigned stock cover of 127 years.

Others mostly cables and conductors were bought at a cost of Sh129million, Sh463million, Sh185million and Sh139million among others.

According to the highly guarded procurement record, ‘bracket steel pole top swer’ under material code 181202 was bought at Sh18, 569,600.00 and assigned a stock cover of 183 years while ‘joint 66KVXLPE 400mm2 AL S/C’ under code material 153416 was purchased for Sh26, 687, 604.79 to cover 35 years.

Concrete fitting U-bolt and nut (20*700M) under code material 186806 assigned stock cover period of 27 years was purchased for Sh18,370,473.70 while ‘Pvc Trunking Type II (Perforated) was bought at a cost of Sh17,552,709.44 for a period of 797 years.

The controversial purchases were done while the sacked former Managing Director Bernard Ngugi served as the Manager in charge of Supply Chain.

He served at the company for over three decades before being dismissed by the board.

He was replaced by Rosemary Oduor in an acting capacity since August 2021.

However, Last month, the Vivienne Yeda chaired board appointed Geoffrey Waswa Muli, replacing Oduor in an acting capacity.

Similarly, impeccable sources intimated that a clandestine and well-connected web of individuals controlling the multi-billion tenders at the power distributor is behind the artificial shortage of transformers to strike a kill through supplies at exorbitant prices.

“They are blaming rampant power outages and claimed unstable power supply to non-existent shortage of power distribution transformers across the country. This is a flat lie. Some people are creating artificial shortage to create business.” Our source revealed.

The recent shortage could threaten the stability of the power supply to millions of electricity users in the wake of procurement woes at the lighting firm.

However, The Informer has learnt that the artificial shortage being witnessed was a result of tenderpreneurs and rogue officials.

It has also been claimed that Kenya Power has been relying on aging transmission infrastructure including old cables and aged transformers that have become prone to malfunctions leading to power outages.

It is also claimed that the shortage has seen the firm unable to replace the faulty transformers and is occasionally forced to take them for repairs for lengthy periods of time.

It has also emerged that the company has embarked on a rapid expansion of its distribution network to connect more homes, businesses, and institutions which has stretched the capacity of existing transformers.

This has led to frequent power outages in parts of the country.

According to Kenya Power, the new transformers will exceed the entire distribution of 8,778 transformers installed across the country.

Due to the high demand, KPLC announced a multi-billion tender for the supply of the transformers, but the bid was temporarily suspended by the Public Procurement Administrative Review Board (PPRB).

This was due to an appeal filed by five local companies.

However, PPRA gave Kenya Power the go-ahead to proceed with the procurement of the transformers.

The companies argued that the tender requirements were lop-sided, unfair, and meant to shut out local manufacturers from the multibillion-shilling deal in favour of foreign firms.

According to the local firms, the tenders demanded firms with 10 years of manufacturing experience, yet the firms argue they were set up in 2015.

Kenya Power is one of the state-owned entities earmarked to benefit to a tune of an undisclosed amount from a Sh86.95 billion State loan.

Two months ago, police in Juja and officials from Kenya Power impounded vandalised power equipment worth more than Sh70 million in Kimbo, Juja Sub County.

Among the seized equipment include 15 transformers, electricity cables, and conductors.

Energy Cabinet Secretary Monica Juma who was present during the raid Juma said those behind the vandalism of power line equipment are a syndicate involving technicians and engineers who work or worked for KPLC.

This is not the first time KPLC has been made a cash cow.

Previously, an intricate web of fraud comprised of senior managers, their juniors and strategically recruited brokers covering all regions across the country were exposed as being behind the power token theft at the loss making parastatal.

This blatant theft went on unabated due to absence of a validator module to regulate transactions of prepaid power token purchases and the status quo remains to date.

The Informer established existence of system manipulation for both postpaid power bills and prepaid power tokens through collusion between rogue KPLC employees, brokers as well as willing customers who want their bills irregularly reduced.

The masterminds of the multi-million shady deals involved KPLC IT and Finance employees granting unauthorized access and assigning special roles to non- staffers and brokers besides giving rogue non staff members with Virtual Private Network (VPN) to enter KPLC domain and manipulate bills

“Prepaid transaction requires a customer to provide meter number, telephone number and correct amount of money. This information is generated from Safaricom network to KPLC server with M-pesa reference number. KPLC server generates tokens which are transmitted to the customer number, this is billed in the pay bill number 888880 with Safaricom. A program developed in-house by KPLC known as RADIS was to translate Safaricom data to a language KPLC system could understand and to handle dropped transactions. The programmers in KPLC were supposed to develop a validator module to regulate these transactions but this was never done.” A report by the DCI shows.

A forensic audit undertaken by twin specialised units; Cyber Security and the Criminal Intelligence Unit domiciled at the Directorate of Criminal Investigations narrowed down the  firm’s “operating systems in use, the system performance, reliability, strength, weakness and as well as incidental and pro-longed compromises.” An investigation report reads in part.

The probe pointed out that failure to develop a validator was by design as this provided a loophole exploited by the rogue system administrators led by the then program developer Samson Kimani who were working under former IT manager Titus Kitavi.

This has not been corrected to date.

Lack of a validator to flag irregular transactions enables rogue Kenya Power employees to generate illegal tokens for sale alongside a genuine transaction.

“A customer making a genuine request for token would have reference numbers i.e RFXYZ. In the event of failure in transactions due to various reasons KPLC Prepaid team after verification from Safaricom Portal would generate the said Tokens manually through the Graphical User Interface (GUI). Rogue individuals altered genuine M-pesa Reference Numbers by replacing the last digit and consequently generating irregular tokens and selling the same to unsuspecting customers. KPLC transactions on Safaricom pay bill no. 888880 does not tally with the Tokens submitted from the Itron Eclipse based on the Audit Report.” The report shows.

Recently, the utility firm attributed power token hitch purchase to technical hitch and alleged many transactions.

“We have managed to address the IT hitch affecting the system that occurred yesterday but vending of tokens remains slow due to a high number of customer transactions,” A statement to newsrooms read in part.

The probed established that KPLC installed the Postpaid Integrated Customer Service (ICS) in the year 1997 after contracting Indra limited, a subsidiary of Indra Systema domiciled in Spain to develop and install the system.

Consequently, the system operated until early 2017 when KPLC again contracted Indra Ltd to upgrade the system to a more viable Intergrated Customer Management Service (InCMS).

Specifically, the contract award covered upgrading as well as maintenance of the new system up to May 2018.

Curiously, the contract has never been renewed further providing loopholes for the internally generated budding fraud.

Due to the rising number of power connected clientele, system upgrade from ICS to inCMS for better customer management where applications such as One Time Charge (OTC), Cash receipting and complementary rebilling were maintained became inevitable.

The report further shows the subsidiary firm, Indra Ltd maintained an OTC module within InCMS for the purpose of reconciliation, for example, “a customer whose account was due with Kshs 10,000 would have Kshs 10,000 debited in their account thus balance carried forward of negative 10,000 and vice versa. This application was known as One Time Charge (OTC).” It adds in part.

“These necessary applications were unfortunately abused through collusion between rogue KPLC employees, brokers as well as willing customers who wanted their bills irregularly reduced. The architecture of the fraud involved KPLC IT employees granting unauthorized access and assigning special roles to non Kplc staff/brokers

This application giving rogue non staff members with Virtual Private Network (VPN) to enter KPLC domain and manipulate bills.” The report findings show.