Columnists

Energy regime change long overdue

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President Uhuru Kenyatta. FILE PHOTO | NMG

In transferring both the Cabinet Secretary for Energy Charles Keter and his Principal Secretary Joseph Njoroge, President Uhuru Kenyatta has attempted to effect regime change in this critical sector.

The duo have been at the helm of the electricity sector for a long time. Mr Njoroge has been in this space from the days he was an intern and a junior engineer at Kenya Power in the early 1980s, rising through the ranks to become CEO and finally, the permanent secretary for Energy and a sitting board member of the company.

Just the other day, he intimated to me that it is Kenya Power that sponsored him to study engineering at the University of Nairobi. A great deal of institutional memory there.

But as we learn from the principles of corporate governance, long tenures can also breed vested interests and stagnation of ideas.

But why do I say that the exit of the duo is as significant as regime change? Regime change refers to the overthrow of a government considered illegitimate by an external force and its replacement with a new government according to the ideas or interests promoted by that force.

In the last 10 years, the electricity sector has provided one of the stages targeted by rent-seeking elites. The infrastructure projects started with noble ideas, which served to open opportunity for powerful elites to make big bucks.

I was not surprised that one of the key recommendations of the John Ngumi-led taskforce on renegotiation of power purchase agreements that presented its report to the President this week — and that appeared to have set the stage for the exit of Mr Keter and Mr Njoroge — highlighted the issue of disclosure and transparency of beneficial interest in the ownership of power purchase agreements.

Because of the opaque manner in which power purchase agreements are negotiated — since we don’t have a system of auctioning these lucrative licences and because most of the contracts are unsolicited deals — rumours and sensational claims are rife about ownership of these merchant companies by the elite of the current administration.

If we can get to the bottom of the issue of transparency in beneficial ownership of these companies it would not surprise if we discover another Mobitelea.

The other day, a reader reached out to provide me with documents from the Companies’ Registry to show me that a member of the Kenya Electricity Workers Union (Ketawu) was a shareholder in one of the leading IPPs, arguing that this was a clear case of conflict of interest.

The union has just put out a statement calling for the removal from office of the board of Kenya Power that includes three members of the John Ngumi-led committee that has been at the forefront of calling for renegotiation of power purchase agreements.

I told the reader that I needed to check the authenticity of what he had sent me from corporate records at Sheria House to confirm whether what he was telling me was accurate. He responded by sending to me by courier complete annual accounts of the said merchant power company.

One of the flagships of President Uhuru Kenyatta’s administration was the Last Mile Connectivity programme where the government spent billions.

But the unintended consequence of it all was that it spawned a regime of multiple and politically well-connected suppliers of electricity meters, transformers, poles, cables and conductors

If we can seriously interrogate the ownership of the companies that have captured Kenya Power’s Sh50 billion per annum procurement budget for ultimate beneficial interest, we may just stumble on big names.

Indeed the main reason and motive for the spirited campaign to remove the current Kenya Power board members is because they have been trying to disrupt the networks that have captured the company by turning its supply chain into a veritable source of inexhaustible largesse.

One of the recommendations of the taskforce is a forensic audit of the company’s supply chain.