The Rural Electrification and Renewable Energy Corporation’s financial statements for the year ending June 30, 2024, have been given a qualified opinion by the Auditor-General, due to several concerns regarding expenditures and payables totaling billions of shillings. Specifically, a receivables balance of Sh543.6 million has been questioned, as the Corporation was unable to provide lease agreements or contracts to support this figure.
Some of these debts date back to 2009, and it was found that the Corporation does not occupy offices, parking yards, or stores with some of the listed landlords. Additionally, Sh55 million related to a court-ordered deposit in a supplier dispute over conductors could not be verified, as no bank confirmation was provided for the joint account holding the funds.
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Unexplained Land Payments
An investigation is underway into Sh1.6 billion paid to three firms for land survey services, as auditors found no evidence of budgeting, inclusion in the annual procurement plan, or competitive procurement for these payments. This lack of proper procedure constitutes a breach of Section 45(3)(a) of the Public Procurement and Asset Disposal Act, 2015. The Corporation’s trade and other payables stood at Sh3.88 billion, with Sh1.34 billion overdue by more than 90 days, exceeding the Corporation’s own 90-day service charter. Furthermore, Sh1.36 billion in “un-invoiced” creditors lacked supporting documentation, and a reconciliation gap of Sh29.2 million was discovered between prior and current year figures.
The Corporation also failed to remit Sh27 million in contributions to the Kenya Energy Sector Environment and Social Responsibility Programme Fund, despite having an obligation of Sh54 million over four years under the 2019-2029 action plan. Moreover, NG-CDF transfers from Kitui West and Mbeere North totaling Sh10 million were given to REREC for electricity distribution projects, but auditors found no evidence that the funds were used as intended, as there were no reports, site visits, or progress documentation to verify the spending.
Idle Funds and Misused Levies
REREC received Sh110 million from the Petroleum Development Fund, which was then used for rural electrification projects, contrary to the Petroleum Development Fund Act, 2012. This law restricts the use of such funds to oil-sector purposes. The Corporation did not budget or plan for this spending, and no procurement procedures were followed. A concessional loan tied to the Garissa Solar Power Plant has defaulted, with the account meant to service the loan showing only one transaction – a bank charge of $7.49 – and holding $17.72 million as of June 30, 2024, in breach of Public Finance Management Regulations on sound cash management. A required loan status statement was not provided for audit.
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The report also criticizes REREC’s board for irregularities, including one member sitting on three committees, exceeding the two-committee limit. Board minutes have not been updated since August 2022, and each of the Corporation’s four board committees has more members than required. Sh14 million in sitting and subsistence allowances was paid for board retreats without the required Cabinet Secretary approval. Additionally, 18 officers were found to be holding positions in an acting capacity, with seven exceeding the six-month limit set under Section 34(3) of the Public Service Commission Act, 2017, without proper justification.
A notable finding involves Sh3.86 million spent on a rural electrification project originally intended for Kakuyuni village in Kangundo Constituency. However, the transformer and power line were installed on privately owned property approximately 35 kilometers from the intended site. Auditors could not determine how the contractor was procured, and no master plan or site inspection records existed to justify the project before construction began. The Corporation also overpaid Sh5.67 million for airtime payments to staff, exceeding the prescribed government rates.
