The Ministry of Regional Development is seeking a refund of more than Sh9 billion from electricity producer KenGen in unpaid annual claims for the use of Masinga dam over a period of more than 20 years.
The ministry claims KenGen was supposed to pay Sh420 million per year to the Tana and Athi River Development Authority (Tarda) for the development of the river basins.
The power producer, which is likely to be crippled by such a demand, however, said the there was no such outstanding amounts as they had settled all the dues as agreed.
The dam was completed in 1981 according to KenGen and later transferred to the Kenya Power and Lighting Company by the government in 1989 after which the power supplier transferred the plant to KenGen in 1999.
Under the arrangement, KPLC would distribute power as KenGen managed power production.
“All power generation assets owned by KPLC will be transferred to KenGen together with the associated liabilities,” Naivasha MP John Mututho, the chairman of the parliamentary Committee on Agriculture, read a letter dated 1999 referring to the agreement.
The associated liabilities included the Sh420 million annual payments to Tarda for development of the Tana and Athi River basins to compensate the local community.
Tarda managing director Francis Agoya, however, said that KenGen has instead been remitting only Sh5 million a month totalling Sh60 million annually.
The House team chairman said that the committee will find out if the omission arose from deliberate negligence.
Mr Mututho directed the Ministry of Regional Development to calculate all the funds due plus the interest accrued.
The KenGen managing director, Mr Eddy Njoroge, however, told the Business Daily that they are paying Tarda what was agreed on and that he does not understand, which agreement was being discussed.
“If they are seeking refunds let them bring the agreement they are referring to to the table,” said Mr Njoroge.
Masinga dam has an installed capacity of 40 megawatts per annum. KenGen manages a total capacity of 1,180 megawatts across the country.
The Sh9 billion was arrived at by multiplying Sh420 million annually for a period of 22 years since 1989 excluding the interest accrued on the claim.
It was, however, not clear whether Kenya Power was also supposed to pay part of the money since they had been in control of the dam up to 1999.
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