The Public Investments Committee (PIC) has summoned Treasury and Kenya Power for failing to implement a House resolution requiring them to pay a development authority more than Sh10 billion owed since 1988.
The committee chaired by Abdulswamad Nassir noted that parliament approved the 19th and 21st reports in which the PIC directed that income owed to Tana and Athi Rivers Development Authority (Tarda) by Kenya Power and KenGen be paid without further delays.
The two power utility firms were to pay the amount as compensation for taking over the management of Masinga and Kiambere dams, which were developed by Tarda to generate hydroelectric power.
“We will call both Treasury and Kenya Power to appear before us to explain why the amount has not been paid. We want to know whether Kenya Power remitted the amount to Treasury and why Treasury had failed to pay Tarda,” said Mr Nassir.
The committee expressed disappointment over non-implementation of the directive and failure by Treasury to respond to earlier summonses.
The chairman said they would equally write to the Committee on Implementation of House Resolutions and ask to look at the matter.
“The Implementation Committee should give us a status on implementing this resolution. By failing to pay Tarda, it means Kenya Power is getting free power which it is selling to Kenyans,” Mr Nassir said.
Appearing before the PIC on Tuesday, Tarda Managing Director Stephen Githaiga said failure to honour the deal, three decades later, put the authority in dire financial troubles.
Mr Githaiga said KenGen was to pay Tarda Sh420 million for operations but decided to pay an arbitrary figure of Sh55 million for usage of the dams.
He said Kenya Power had not yet paid any amount.
“Kenya Power and KenGen have ignored advice by Parliament, the Attorney-General and World Bank. This is despite the fact that funds were approved by parliament and set aside for this purpose,” Mr Githaiga said.
According to an audit report by Auditor-General Edward Ouko, the failure by Kenya Power and KenGen to pay Tarda occasioned a negative working capital of Sh12 billion for the authority.
The authority pays rent using Sh5million monthly remittances from KenGen.
“The key issue is the fragile financial performance which has been affected by the two organisations for failure to pay Tarda over Sh10 billion as a result of the transfer of power generation and transmission assets,” said the MD.
In 1988, the government issued a directive for Tarda to hand over its power generation and transmission assets at Masinga and Kiambere dams.
Tarda signed a commercial agreement with Kenya Power, then Kenya Power and Lighting Company (KPLC), for the sale of bulk energy on July 5, 1978, from Masinga dam at 7 cents per kilowatt hour.
After the commission of Kiambere dam in 1988, Tarda signed another agreement that tied Kenya Power to pay 32 cents per kilowatt hour through a lease signed on December 30, 1983, but the agreement was never honoured.
KenGen and Kenya Power also took over Tarda’s 193 rental houses, canteens, and halls, occasioning loss of revenue worth Sh780,000 per month. The loss accumulated to Sh225 million by end of 2012.
As soon as Kenya Power disregarded the lease and government agreements in 1988 and the eventual transfer of the power generating assets in 2000, Tarda's financial base was affected.
Mr Githaiga told the committee that the authority was self-sustaining entity before 1988.
“When KPLC disregarded the lease with Tarda and the transfer of power and transmission equipment, the financial base of the authority was incapacitated,” he said.
Wajir MP Rashid Amin and his Kimilili counterpart Chris Wamalwa wondered why the implementation had taken long and whether treasury and Kenya power were overlooking the powers of the House.
“The committee has the power to query government investments. We cannot be taken for granted,” said Mr Wamalwa.
Parliament directed the Energy ministry to resolve the matter and make payments to Tarda but it has failed to do so.