Former Energy minister Kiraitu Murungi and two ex-principal secretaries, Patrick Nyoike and Joseph Njoroge, have been linked to one of the independent power producers (IPPs) MPs blame for high electricity prices in the country.
The names of the three came up in a probe on the ownership of Gulf Power Limited, one of 11 IPPs at the centre of a parliamentary inquiry into the high cost of electricity in the country.
It emerged that the firm has directors and shareholders from overseas, owning majority of shares, despite being listed as a local IPP.
The Senate Committee on Energy, which is chaired by Mr Wahome Wamatinga (Nyeri), had invited the firm’s managing director or chief executive to appear before them yesterday. Neither came, with the firm’s General Manager Norman Wanderi making an appearance instead.
In his submission, Mr Wanderi revealed that Mauritius-based Gallant Power Limited owns 80 ordinary shares in the firm. The other 20 ordinary shares are owned equally between Kenya Power and Lightning Company Limited Staff Retirement Benefits Scheme and Noora Power Limited.
The directors list, however, is mostly a Kenyan affair, comprising East Africa Legislative Assembly lawmaker Suleiman Shabhal, Mr Francis Koome Njogu, Mr Ernest Nadome, Mr Ahmed Said Bajaber and Mr Duncan King’ori Mukira alongside American Philip William Dyk.
The revelation of the shareholding, according to a CR12 form dated January 31, 2023, elicited questions from the senators.
Senator Wamatinga demanded to know why the majority shareholder in the firm is a company registered in another country.
Hard-pressed by the committee to reveal the beneficial owners of Gallant Power Limited, Mr Wanderi said he could not immediately provide the information.
The casual response caused an outrage from committee members, who accused the official of concealing information to protect powerful individuals.
Mr Wanderi also came under fire on why he was fronted to appear before the committee yet the invite was directly addressed to Mr Njogu, a director and the CEO.
“What you have given us half-baked information and I feel like it is deliberate ,” charged Mr Wamatinga.
“You have indicated that Gulf Power Limited is a local IPP. Why then is it that a majority shareholder is registered in Mauritius? Is it true that [Mr] Murungi, [Mr] Nyoike and [Mr] Njoroge own part of this company?” he posed.
The senator questioned how one of the former PSs came to own shares in the firm yet the power purchase agreement was signed during his tenure as managing director of Kenya Power.
Mr Wanderi denied that the three former State officers are shareholders in Gulf Power Limited, but failed to provide a list of the real directors.
“The individuals you have named may not be directors of Gulf Power. As far as I am concerned, that information is not true,” Mr Wanderi said before the committee adjourned its sittings and directed that the firm’s managing director appear in person.
Siaya Senator Oburu Oginga, citing a presidential task force report that reviewed power purchase agreements in 2018, said Gulf Power, which has signed a 20-year contract with Kenya Power, of selling electricity at twice the cost compared to other IPPs.
“The observation we have from a report by the presidential task force which analysed to the PPAs states that in the financial years ended June 2018, 2019 and 2020; this company was the highest, in fact, it was double in the charges they were making in terms of electricity that of other IPPs,” said Dr Oginga.
He questioned why the contract signed with Kenya Power does not have a termination clause despite it being exploitative.
The senator observed that the agreement states that Gulf Power has an agreement for 20 years with Kenya Power with a possibility of extension for another term yet there is no clause talking of termination if the government wants to exit the contract. Gulf Power entered into a Power Purchase Agreement (PPA) in December 2012 with Kenya Power putting the utility firm under obligation to buy electricity generated from the thermal plant and also pay energy charges, fuel charges and excess start charges for the Net Electrical Output.
According to Kenya Power’s annual report for the financial year ended June 2022, the firm with an installed capacity of 80.32 megawatts sold 81Gwh to Kenya Power during the period under review receiving Sh3.56 billion.
In the previous financial year, the firm sold 21 Gwh of power to Kenya Power, receiving Sh2.5 billion in the process.
Another point of contention for the committee was the fact that Kenya Power and Lighting Company Limited Staff Retirement Benefits Scheme 2006 is listed as director and shareholder in Gulf Power hence presenting a conflict of interest.
