SRC targets Kenya Power, KenGen for job evaluation

The Salaries and Remuneration Commission (SRC) is set to extend its mandate of reviewing the tasks and salaries of public officers to two of Kenya’s largest State-owned firms Kenya Electricity Generating Company (KenGen) and Kenya Power, a senior official with the agency said on Thursday.

Nicodemus Odongo, the acting SRC deputy secretary, told journalists in Nairobi that the agency’s legal mandate gives it the authority to set salaries and determine the benefits of all State corporation employees including KenGen and Kenya Power where the government has a majority shareholding.

“All organisations in which the government has over 50 per cent shareholding is defined as a State corporation and therefore subject to the job evaluation exercise,” Mr Odongo said during a workshop to sensitize the media on the upcoming review.

“Commercial state agencies cannot claim to be independent when things are fine but when they run into trouble they seek bailouts from the government,” he said.

Mr Odongo’s position is expected to revive a recent debate on whether the SRC’s powers extend to commercial state corporations whose workers are paid from self-generated funds, a stand which has seen the agency face opposition from some parastatals.

In the special case of KenGen and Kenya Power, the only two listed parastatals that are majority owned by the government, external pay guidelines are seen as posing the risk of hindering the organisations from offering remuneration that can attract top talent. 

The SRC plans to roll-out a public service jobs evaluation exercise in two weeks following the appointment of Deloitte and Touché as one of the four consultancy firms that have been hired to oversee the Sh500 million pay and grading harmonisation drive expected to last at least 1.5 years.
The Treasury owns 50.1 per cent of Kenya Power and 70 per cent of KenGen, placing their ultimate control in the hands of government.

READ: SRC in bid to freeze salaries of overpaid civil servants

The two are also owned by thousands of local and international investors who bought shares on the Nairobi Securities Exchange (NSE) and expect optimal returns on their investment.

Specialised employees (including expatriates) working in such parastatals are typically paid higher salaries, a reality that may come to an end with the evaluation exercise.

Directors of these companies have used growth in certain financial years and the need to have the right team to justify the extraordinary packages.

Financial analyst Robert Bunyi reckons that KenGen and Kenya Power may not able to sustain Civil Service wages, a scenario which could in the long run impact negatively on their performance.

“The two power firms should be exempt from SRC’s review and be solely governed by the Capital Markets Authority which has all investors, irrespective of shareholding, interest at heart,” Mr Bunyi told the Business Daily in a telephone interview.

“If you restrict what these firms can pay for top talent, their attractiveness to employees and investors drops. SRC’s evaluation is primarily in the government’s interest and may not tally with the interests of the minority shareholders.”

SRC has appointed Deloitte to review commercial and service/regulatory state parastatals while its peer Ernst and Young will evaluate the core civil service.

The contracts to evaluate the disciplined services, county government, teachers, public universities and tertiary education institutions, research institutions and independent offices are set to be awarded in the coming weeks.

The SRC’s powers over government-owned commercial entities owned  have been the subject of a long-drawn tussle with the latest eruption in Chemelil, Muhoroni, and South Nyanza (Sony) sugar companies.

The three millers’ employees have sued the SRC seeking the court’s intervention to stop the agency from interfering with the collective bargaining agreements (CBAs) they signed with their employers.

READ: Sugar firms workers cry foul after SRC halts pay raise deal

The Industrial Court ruled in their favour noting that the constitutional provision defining the SRC’s mandate does not include State corporations whose workers are paid from self-generated funds.

The Attorney-General Githu Muigai also offered a legal opinion that is in line with the court’s judgment.

But the SRC now says it in the process of challenging the court’s decision adding that until then, it shall respect the court and only begin evaluating non-contested segments of the public service pending the outcome of their petition.

Parastatals like public universities and hospitals receive annual grants from the Treasury payable from the Consolidated Fund placing them squarely under the SRC’s mandate.

Others like the Communications Authority of Kenya, National Hospital Insurance Fund, and the Capital Markets Authority are financed by fees generated from the public.

Kenya Ports Authority and Kenya Co-operative Creameries while, like KenGen and Kenya Power, fall in the commercial section, pay the salaries of their employees and boards of directors without any support from the government.

“We are not flexing our muscles or looking to fight anybody,” James Muhoro, another SRC Commissioner said. “The job evaluation process is a concerted effort by all stakeholders to streamline the public sector.”

Mr Muhoro added shareholders of the two listed commercial parastatals stand to gain since the employees working to grow their investments will be content with their jobs and work even harder.

A year ago, the chief executives of KenGen and Kenya Power announced that they were going to heed President Uhuru Kenyatta’s directive to slash their salaries by 20 per cent.

SRC however says the two corporations are supportive of the upcoming job evaluation exercise, adding that KenGen’s top management in December requested them for an opinion on their pay.