Treasury Principal Secretary Julius Muia told Parliament on Wednesday that he was not aware of the overpayment to Kenya Power and the decision to refund the money through a CBK account in Frankfurt.
The German lender rejected the refund for excess payment of idle power charges paid in 2018, citing a lack of sufficient details of the ultimate beneficiary of the millions of shillings paid to the CBK account.
MPs put Dr Muia to task to explain why he was claiming ignorance despite being copied in three separate letters from LTWP informing Kenya Power of the excess payment and the German transaction.
The Treasury has disowned a deal that saw Standard Chartered Bank in Frankfurt, Germany, reject Sh785 million wired into a Central Bank of Kenya (CBK) account by Lake Turkana Wind Power (LTWP) as refund for excess pay from Kenya Power.
Treasury Principal Secretary Julius Muia told Parliament on Wednesday that he was not aware of the overpayment to Kenya Power and the decision to refund the money through a CBK account in Frankfurt.
The German lender rejected the refund for excess payment of idle power charges paid in 2018, citing a lack of sufficient details of the ultimate beneficiary of the millions of shillings paid to the CBK account.
It also demanded supporting documents for the payment amid increased oversight by German financial regulator BaFin for money laundering breaches, which have seen lenders in the European country slapped with multi-billion shilling fines.
Parliament is currently investigating how Kenya Power #ticker:KPLC made the excess payment to LTWP and why the utility and State officials have been hesitant to receive the money from the wind power producer.
“I am not aware and would have to check that. I will need more time,” Dr Muia told the National Assembly’s Public Investments Committee (PIC) on Wednesday when asked about the botched transfer of the Sh785 million.
MPs put Dr Muia to task to explain why he was claiming ignorance despite being copied in three separate letters from LTWP informing Kenya Power of the excess payment and the German transaction.
“I hand you three letters from LTWP seeking assistance to refund the money. The letters are copied to you,” PIC chairman Abdulswamad Nassir said.
“Why has the Treasury allowed somebody to keep Sh785 million? Somebody must be earning interest.”
Dr Muia said if indeed the Energy ministry made excess payments that were yet to be refunded, “yes interest is being earned unfairly.”
He told Parliament to give him one week to get to the depth of the Sh785 million fiasco.
The Marsabit-based power firm says it transferred the cash to the Frankfurt account in December after Kenya Power provided the CBK account details for the transaction.
But Standard Chartered Bank in Germany rejected the cash and returned it to LTWP account amid claims it failed to meet the customer due diligence requirements, terming the cash transfer suspicious.
LTWP tabled in Parliament a letter it sent to Kenya Power, capturing its frustrations over the Sh785 million refund that few government officials want to be associated with.
The electricity generator has since December 23 contacted Kenya Power three times and the CBK twice in search of the documentation supporting the transfer of the overpayment.
The CBK has remained mum while Kenya Power shifted the burden to the Ministry of Energy in a terse letter sent to LTWP on January 27.
A senior banker in Kenya says the German bank had possibly declined the transfer because the ultimate recipient of the millions of shillings from the CBK was not disclosed.
He added that the CBK could also have declined to be a party to the transaction, which has raised more questions than answers.
MPs have questioned the overpayment of Sh785 million in 2020 to LTWP for energy not consumed by taxpayers.
The payment followed delays in the construction of the transmission station to evacuate power from the 40,000-acre Loyalangalani wind farm in Marsabit County to the national grid.
The investor received 45,197,003 Euros (Sh5.7 billion in 2021) when what was due to it was 39,023,703 Euros (Sh4.9 billion), hence the excess of 6,173,296 Euros (Sh785 million).
LTWP commissioned its 310 megawatts power plant on January 27, 2017, but the government, which built the evacuation line, did not complete the works until September 24, 2019.
The probe comes on the back of changes at the electricity generator that pushed out CEO Jon Abbas Zaidi over allegations of financial misconduct.
His short tenure ended alongside that of the company’s chief finance officer Ashish Chadda.
The two were fingered for an alleged irregular payment from the firm’s coffers without the board’s approval, which saw PricewaterhouseCoopers (PwC) hired to do a forensic audit of the company’s books.
Mr Zaidi had replaced founding CEO Rizwan Fazal in November 2019 but was suspended from his role in July last year.
David Mwangi took over in an acting capacity until Phylip Leferink was appointed new chief executive in October.
