Why MPs have dropped call to probe ex-energy bosses

MPs have backed down from a direct call to investigate the former Energy Principal Secretary and ex-Kenya Power chief executive who oversaw the controversial Lake Turkana Wind Power (LTWP) deal, particularly their failure to recruit the firm competitively.

They had also been accused of their failure to undertake a risk assessment before giving the firm the go-ahead to set up the wind farm in Marsabit County.

In a reversal of an earlier directive to anti-graft and criminal investigation agencies, Parliament’s Energy Committee appears to have let former Energy Permanent Secretary (PS) Patrick Nyoike and former Kenya Power Chief Executive Joseph Njoroge off the hook.

An earlier draft report had recommended they be probed for their role in signing skewed agreements that ended up hiking the cost of electricity for Kenyan consumers. While the initial draft report, tabled in November 2024, specifically recommended that the Ethics and Anti-Corruption Commission (EACC) and the Directorate of Criminal Investigations (DCI) investigate Nyoike and Njoroge, the final report adopted last week abandoned this specific naming.

Instead, the final report recommends that EACC and DCI “conduct a further investigation on the Ministry of Energy and Kenya Power officials at the time, which LTWP project was conceptualised to be held accountable for,” a seemingly vague directive that shifts focus away from high-profile figures.

“Upon adoption of this report… EACC and DCI conduct a further investigation on the Ministry of Energy and Kenya Power officials at the time which LTWP project was conceptualised to be held accountable for – not ensuring the competitive process was followed in the identification and implementation of the LTWP project, not conducting an independent legal risk assessment before execution of contracts for a critical project of that scale which led to hurried approvals being granted in disregard of relevant laws,” reads the report of the Committee that is chaired David Gikaria.

It further notes that the Energy Ministry Officials should be held accountable for “exposure to taxpayers and the utility company to undue financial obligations arising from Deemed Generated Energy (payments) made based on the assumed capacity factor of 62 per cent which was later revised to 54 per cent during the second agreement variation, dispute the absence of a functional metering system to accurately determine the production from the power plant as prescribed in clause 11.1 of the LTWP Power Purchase Agreement (PPA).” 

The final report is a complete departure from the draft report. The draft, while also noting that other Energy Ministry and Kenya Power officials should be probed, was specific about PS Nyoike and Njoroge being investigated.

The committee, at the time chaired by Mwala MP Vincent Musyoka, recommended that “within six months upon the adoption of this report… the EACC in cooperation with the DCI conducts investigations on possible conflicts of interest on the following persons; Mr Patrick Nyoike, who served as the then Energy Permanent Secretary of Energy and Petroleum between 2003 and 2012… for being involved in the fast tracking of the PPA between Kenya Power and LTWP (through a letter dated May 25, 2009).”

The report noted that Nyoike’s actions were despite concerns raised by the National Treasury that the project required further thought before implementation and confirmation of its cost-effectiveness.

The report also recommended that EACC and DCI probe Njoroge, who served as the Managing Director of Kenya Power from 2007 and 2014.

“As the Managing Director of Kenya Power, Njoroge was implicated in the approval of the LTWP PPA, which was signed before the company had obtained a licence to generate electric power,” said the Committee in the report.

“The PPA was also executed without a proper legal risk assessment and was part of the Kenya Power board that ignored concerns raised by the World Bank… key among them being the take or pay obligation in the PPA that exposed KPLC to the unacceptable high financial risk of payment of curtailed energy.” 

Eng Njoroge also served as Principal Secretary of Energy and Petroleum between 2015 and 2021.

The report, which was adopted by Parliament last week, is expected to trigger several probes in the energy industry as per the Committee’s recommendations.

The report itself was triggered by a motion moved by Laikipia County MP Jane Kagiri that sought to reduce the cost of electricity in the country in 2023.

Kagiri had questioned the disparity between the cost of power generated by KenGen and Independent Power Producers (IPPs).

When she brought the motion to the National Assembly, she noted that there is a need to regulate all IPPs in the country and publicise their locations, stakeholders, directors, management and their addresses. In addition, she said, “the agreements the IPPs have entered into with Kenya Power should be made public to enable proper scrutiny”.  

She also wanted the Energy Committee to make an inquiry into the operations of Kenya Power, particularly looking into the PPAs they have signed with IPPs, as well as what she said was an over-reliance on IPPs against available renewable and other energy sources. She also wanted the committee to recommend measures to be taken to reduce the cost of electricity.  

Privately initiated proposal

In writing the report, the Energy Committee received views from Kenyans and among the key people who made submissions included Njoroge and Nyoike.

According to the report, Njoroge said he did not play any role in granting any exclusive right to LTWP to survey the area in Marsabit where it would later put up the wind farm, which is the largest in Africa.

He noted that the project was processed as a privately initiated proposal under the Private Public Partnership (PPP) framework and that the Ministry of Energy had advised Kenya Power to initiate discussions with LTWP.

Njoroge, whose comments are captured in the report, added that his role was limited to coordinating the preparation of PPAs between Kenya Power and LTWP and forwarding them to EPRA for approval and that he did not influence the approval process.

Njoroge also noted that the concerns that had been raised by the World Bank may not have been valid as the injection of LTWP’s 300MW into the grid did not have any negative impact on the grid’s reliability and stability. 

LTWP, the largest wind power plant in Africa, has been hailed as among the key renewable energy projects in the region. And while its tariff is fairly low, especially when compared to thermal power plants, it has been the subject of controversy, particularly after it levied a Sh23 billion penalty on the country in 2018 that was partly borne by the government, while the balance was recovered over time from consumers through monthly power bills. 

The penalty was after Kenya failed to have in place a power transmission line from Loyangalani in Marsabit to Suswa to evacuate power from the plant to the national grid as had been agreed when signing the PPA with Kenya Power. This meant that on completion, the power plant owners could not sell electricity to Kenya Power. 

LTWP has had a checkered history. A pioneer in the field, it was at some point the largest commercial wind farm in Africa and its commissioning in 2019 had the effect of further enhancing Kenya’s grid as among the most green globally.

Its addition to the grid helped reduce the use of heavy fuel-oil-fired power generators, which has in turn resulted in the country saving upwards of €120 million (Sh17.87 billion) annually in fuel imports.

The flipside is that it exposed Kenyans to high cost of power through the penalties the project owners imposed on the government for failure to have the transmission line ready at the time the plant was completed. The penalty was partly borne by the consumer through a higher tariff.   When the PPA was signed in 2010, the government also committed to constructing a 420-kilometre high-voltage electricity transmission line from Loiyangalani, where the wind farm is located, to Suswa where it connects to the rest of the grid.

The line was, however, not ready by 2017 when the plant was ready to start feeding power to the grid and would only come into operation in September 2018.

The result was that Kenya had to compensate LTWP, as the absence of the transmission line meant it could not sell electricity to Kenya Power. 

Special audit

The penalties to the government, referred to as DGE, amounted to €167.26 million (Sh24.9 billion in today’s exchange rate). The government paid some €85.68 million (Sh12.77 billion)) while the balance of €81.58 million (Sh12.16 billion) was recovered from consumers over six years to May 2024 through a tariff increase.

Over the six years, Kenyans paid LTWP €0.0845 (Sh12.59) per kilowatt hour compared to the €0.07222 (Sh10.76).

A 2021 special audit on the LTWP project found that officials at the Energy Ministry had on numerous occasions dropped the ball, which later turned costly.

Aside from failure to competitively recruit LTWP, the Auditor General also found that there was no independent legal risk assessment that should have mitigated against unnecessary damages such as the deemed generated energy payments that run into billions.

The Kenya Electricity Transmission Company (Ketraco) also seemed to have failed in doing due diligence into the firm that it initially contracted to build the Loiyangalani–Suswa transmission line, which failed to deliver the line on time.

At the time, the Auditor General had recommended that the Energy Ministry and Kenya Power be held accountable for the mistakes that ended up costing Kenyans billions of shillings in both higher electricity bills as well as payments made by the exchequer.

“The Ministry of Energy and Kenya Power should be held accountable for not ensuring a competitive process was followed in the identification and implementation of this project to ensure fairness, transparency, equity and cost effectiveness,” said the Auditor General in the Special Audit report in 2021.

It added that the Ministry and Kenya Power also failed to conduct “an independent legal risk assessment prior to execution of contracts for a capital project of this magnitude”.

“These infractions exposed the government, taxpayers and other partners to value for money and litigation risks for delayed payments to contractors,” said the Auditor General.