It is not surprising that pundits read political intrigues in this week’s dramatic exit of five independent directors of the state controlled Utility, Kenya Power.
Boards of strategic parastatals are filled by cronies of powerful politicians whose tenures in those positions can change abruptly, depending on the political fortunes and mettle of their political sponsors.
Basically, you serve in the positions of director of a strategic parastatal only as long as your political sponsor continues to wield clout and political influence.
Although the statement by the company attempted to couch the episode as a result of voluntary resignations, pundits knew better. The height of irony in the sage was while energy minister Charles Keter sought to play down the political angle -suggesting that the resignations were normal, observers appeared more interested in a tweet by one of the directors- the former Nandi County representative, Zipporah Kering, where she described her resignation from the board as political witch hunt. ‘We shall overcome’ she added.
Clearly, the resignations were seen in many circles as reflecting rising factionalism and political tensions between two main ethnic coalitions that provided the bulk of the support to the Jubilee administration.
That arrangement came with an unwritten power sharing deal that allocated ministries and parastatals between the elite of those two communities. The board members who have exited were mainly individuals who owed their positions to the state of ethnic power play and clout of their sponsors during those early days of Jubilee administration.
Of the five directors who have existed, Adil Khawaja, Wilson Mugung’ei have been on the board since December 2014, Kairo, Brenda Kokoi since December 2016 and Zippora Kering and Mehboob Mohammed since December 2017.
Interestingly, Khawaja also exited the board of the Kenya Commercial Bank where has all along been an influential player, having at one time served as the chairman of the bank’s biggest subsidiary and Kenyan operation-the Kenya Commercial Bank (K) Ltd. It does not surprise that pundits are also interpreting his exit there against the backdrop of broader political shenanigans.
Appointment of directors of parastatal on the basis of cronyism is at the heart of the corporate governance crisis in the parastatal sector in this country.
As you go through academic backgrounds, skills, and experience of some the individuals who have exited from the Kenya Power Board, it is clear that cronyism-not competence, knowledge, and experience- was the reason they were appointed to these positions.
But what is the state of the health of the company as the board quits? You cans say that a great deal has been achieved in expanding and customer numbers and in electricity connection
But the board has left behind a company in massive debt. The debt-driven expansion programme that the board presided over is what has helped this strategic parastatal sustain appearances of prosperity.
What do you say of a company whose debts are more than 35 per cent of pre-tax earnings? Or when what the company pays in interest is more than its annual earnings?
The impact on onerous debt obligations are clear: dwindling cash flows that translate into escalating plant break downs and bouts of crippling blacks.
The exiting board has also preside and was therefore unable to finance maintenance. Delays in critical maintenance has caused a significant deterioration of plant performance.
I have a solution for the majority shareholder, namely, the government: first, a financial bail-out of the company is now an imperative. Take away all those state-linked loans from the balance sheet of the company.
And, having removed the board, follow through by throwing out the management and bringing in an independent third party to run Kenya Power under a management contract. I proposed a successful integrated utility company out of Europe or Tokyo.
We must stop jeopardising the energy security of the citizen of this country. Period.