Kenyans to pay more for delayed power transmission lines

Kenyans may be forced to incur increased expenditure on electricity transmission running into billions of shillings as Kenya Electricity Transmission Company (Ketraco) is facing difficulties in having the projects concluded in time.

The extra charge on the taxpayer is in the form of contract cost variation- increased prices of materials brought about by delays in having the projects completed as scheduled, or breach of agreement implications occasioned by termination of contracts by Ketraco.

BILLIONS

A huge chunk of the billions invested in the projects is in form of commercial loans procured from development partners.

Wayleave compensation, which has greatly contributed to the delays, is another issue that Ketraco under the leadership of Managing Director Fernandes Barasa is grappling with. 

Already the electricity transmission firm has Sh4.59 billion in pending wayleave compensation bills, which is likely to go up as the cost of land can only appreciate.

An audit report by Auditor General Edward Ouko currently before the National Assembly, has flagged out a number of issues that if not addressed, will see the taxpayer continue to suffer the effects of poor planning. 

For instance, the completion of Sh10.5 billion Nairobi ring project is behind schedule as at June 30, 2018 despite the work starting in May 2012 with completion date expected in November 2014.

The project entails construction of a transmission line from Suswa to Isinya together with five sub-stations at Suswa, Kimuka, Isinya, Athi River and Komarock.

CONTRACT TERMINATED

However, only Suswa and Isinya sub-stations have been completed.

The Sh7.203 billion Nyahururu- Nanyuki, Lessos- Kabarnet, Olkaria- Narok and Wote- Kitui- Mwingi transmission lines were due in December 2017.

But they are behind schedule after the contract was terminated. 

Kenya procured a loan from the Exim Bank of India to fund two transmission lines and six sub stations that have dragged for years.

They include Turkwel-Ortum- Kitale transmission line which is under construction by KEC International limited at Sh1.23 billion.

Though the line was scheduled for completion by August 2015, only 89 per cent of the works had been done as at June 30, 2018.

The company was also required to construct two substations at Kitale and Ortum for Sh1.877 billion.

RISKS

The two sub-stations were scheduled to be completed by December 2017. However, they were at 70 per cent completion rate as of June last year.

“It is not clear why these risks were not identified at the project planning stage and mitigation measures taken to eliminate or minimize their adverse impacts on project completion,” Mr Ouko says in the report.

At a previous meeting with the Energy Committee of the National Assembly, Mr Barasa was accused by Turkana South MP James Lomenen for colluding with contractors to fake hostilities in Turkana so as to delay the projects and therefore have its costs varied upwards at the expense of the government.

The fact that the contract for the Kitale and Ortum substations has been terminated by Ketraco because the contractor was bankrupt, means that due diligence and financial evaluation by Ketraco on the company may not have been conducted as required.

STALLED PROJECTS

The Lessos- Tororo transmission line project is also behind schedule.

The project, which is under construction with an initial contract price of Sh941.168 million being loan from Spain, started in September 2013 and was set for completion in April 2015.

As at June 30, 2018, only 37 per cent of the transmission lines and 40 per cent of the sub-stations had been completed.

Again, the contract was terminated in April 2016 due to non-performance by the contractor, who obtained court orders stopping Ketraco from accessing the site or hiring a new contractor until the dispute is resolved.

Subjecting Kenyans to another round of procurement processes to complete the stalled projects that should have been completed long ago is another added expense that needed to be avoided at the project planning level.