Audit findings for the Rural Electrification and Renewable Energy Corporation’s financial statements, which cover the period up to June 30, 2024, have been issued by the Auditor-General, highlighting several concerns, including expenditures that lack supporting documentation and unresolved payables totaling billions of shillings.
Disputed Receivables
The audit report raises questions about a Sh543.6 million balance related to exchange transactions, as the Corporation was unable to provide lease agreements or contracts to substantiate this amount. Some of these debts originated as far back as 2009. Furthermore, auditors discovered that the Corporation does not maintain offices, parking areas, or storage facilities with some of the listed landlords. An additional Sh55 million, tied to a court-ordered deposit in a supplier dispute over conductors, could not be verified due to the absence of bank confirmation for the joint account allegedly holding these funds.
A separate investigation is underway regarding Sh1.6 billion paid to three firms for land survey services. Auditors found that these payments were made without evidence of budget allocation, inclusion in the annual procurement plan, or competitive procurement processes, which constitutes a breach of Section 45(3)(a) of the Public Procurement and Asset Disposal Act, 2015.
Overdue Payables
The Corporation’s trade and other payables amounted to Sh3.88 billion, with Sh1.34 billion overdue by more than 90 days, exceeding the Corporation’s own 90-day service charter. Additionally, Sh1.36 billion in “un-invoiced” creditors lacked supporting documentation, and a discrepancy of Sh29.2 million was found between the previous and current year’s 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.
NG-CDF and Petroleum Fund Concerns
Kitui West and Mbeere North NG-CDFs transferred Sh10 million to the Corporation for electricity distribution projects, but auditors could not find evidence, such as reports or site visit records, confirming that the funds were utilized as intended. Moreover, no formal agreement outlining responsibilities or timelines was signed before the transfer of funds.
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In another finding, the Corporation received Sh110 million from the Petroleum Development Fund and used it for rural electrification projects, contrary to the Petroleum Development Fund Act, 2012, which stipulates that such funds should only be used for oil-sector purposes. The spending was not backed by budgeting or procurement planning.
Inactive Funds and Governance Issues
A concessional loan for the Garissa Solar Power Plant, completed in November 2018, has defaulted. The escrow account meant to service the loan had only one transaction in the entire year, a bank charge of $7.49. As of June 30, 2024, the account held $17.72 million (approximately Sh2.79 billion), which remained idle, violating Public Finance Management Regulations on sound cash management. Additionally, a required loan status statement was not provided for audit.
The report also criticizes the Corporation’s board for irregularities, including a member sitting on three committees, exceeding the two-committee limit, and board minutes not being updated since August 2022. Each of the Corporation’s four board committees had more members than required. Furthermore, Sh14 million in sitting and subsistence allowances was paid for board retreats without the necessary approval from the Cabinet Secretary.
Staffing and Payroll Discrepancies
Eighteen officers were found to be holding acting positions, with seven exceeding the six-month limit set by Section 34(3) of the Public Service Commission Act, 2017, without proper justification. The Corporation partially implemented a 2019 Salaries and Remuneration Commission job evaluation, resulting in General Manager-grade staff being paid incorrectly. Airtime payments to staff also exceeded the prescribed government rates, leading to an overpayment of Sh5.67 million.
Project Dispute
A Sh3.86 million expenditure is associated with a rural electrification project initially intended for Kakuyuni village in Kangundo Constituency. A physical verification in December 2024 revealed that the transformer and power line, labeled for Kakuyuni, were instead installed on private property approximately 35 kilometers away 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 its commencement.
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