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Audit flags inflated Kenya Power generator prices
Auditor General Nancy Gathungu making a presentation during the 8th Public Finance Management (PFM) Conference on November 5, 2025, at the Grand Royal Swiss Hotel, Kisumu.
Kenya Power is on the spot over price inflation and payments for ghost services while building off-grid power stations, exposing taxpayers to losses running over Sh60 million.
The utility firm is accused of paying for services not rendered and inflating generator prices in a project backed by the State and the French Development Agency (AFD) to connect marginalised communities to off-grid power.
The Hybrid Generation of Off-Grid Power Systems project was started in August 2016 and is scheduled to end in June.
A new audit has, however, flagged Kenya Power’s payment of Sh36.2 million to a local construction firm and a foreign supplier to construct structures that were already in existence.
Kenya Power contracted Hyperteck Electrical and MPMC Powertech as a joint venture to design and build diesel-solar photovoltaic hybrid plants at four off-grid stations in three Northern Frontier counties.
The power plants are in Eldas and Habaswein (Wajir County), Elwak (Mandera), and Merti (Isiolo).
The contract also provided for erection of temporary facilities, including a site office, sanitary and sewage system, and a water supply and treatment facility at Sh36.2 million, a report by the Auditor-General states.
“However, physical verification at Habaswein and Eldas stations revealed that the structures erected at a cost of Sh6,234,414 were made of iron sheets, and were of a lower value than the stated cost which had been authorised for payment," said Auditor-General Nancy Gathungu.
“In addition, the sanitary and sewage facilities, and a water supply and treatment facility provided for at a cost of Sh23,878,341 were already existing at the project sites prior to contract commencement.”
The public auditor says only a pit latrine was erected at one of the sites “which indicated that the facilities were not constructed by the contractor, despite approval of the payment.”
Ms Gathungu also flagged a case of price inflation in the purchase of generators to power electricity generation at the off-grid stations, noting one of the generators had an unexplained price variance.
“The exhaust system for Eldas, which had a generator with a nominal power rating of 320 kilowatts (kW), was priced at $420,825.30. ln contrast, Elwak station had a larger generator rated at 1,096 kW in capacity priced at $121,265.22, while Habaswein station's generator with a rating of 872 kW was priced at $119,959.92,” she pointed.
This means that at a cost of Sh54.3 million (at current exchange rates), the 320Kw generator was more expensive than a 1,096kW generator which cost just Sh15.6 million, despite having more than three times the power.
The public auditor faults the lack of justification or supporting documentation to explain the high price variances, noting that value for money spent on the Eldas exhaust system could not be ascertained.
Construction and supply of major equipment at the four stations was expected to be completed by December.
The Hybrid Generation of Off-Grid Power Systems project was started to ensure provision of clean and reliable energy to communities that have had challenges with supply from the national grid.
It is funded through a Sh3.73 billion loan from the ADF, with Kenya Power’s role being to establish off-grid power stations, to supply power to target communities.
Kenya Power reckons that the 30 stations under the program are located in towns that are too far to make national grid connection economically viable, though powering them using diesel has also been costly at Sh2 billion annually.
By June 2025, Kenya Power had used less than half (Sh1.57 billion) of the project’s budget, exposing it to a possible miss of target by end of the project period in June 2026.
“The credit is set to lapse in June 2026, while implementation of the project was at 17 percent, with works ongoing at only four out of the 23 off-grid stations in the nine years the project has been implemented,” Ms Gathungu says.
Kenya Power blames erratic climatic conditions due to El Nino rains and backdrops of insecurity in the project areas for the delays, but the public auditor raises doubts that the utility will complete the project by June.
