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Deloitte books millions in Kenya Power tender

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Kenya Power acting CEO Jared Othieno. FILE PHOTO | NMG

Electricity distributor Kenya Power has inked a deal with Deloitte that will see the Big Four accounting firm earn Sh58 million professional fees for consultancy services to implement a new structure aimed at streamlining the utility service provider amid a recent plunge in profitability.

The scandal-rocked State firm, which revealed the eye-watering sum in a tender notice, is eyeing an improvement of its financial position.

Kenya Power acting chief executive Jared Othieno did not respond to Business Daily’s queries by the time of going to press on whether implementation of a new structure will lead to lead to possible job losses.

It was also not clear what Deloitte’s brief is exactly as the new structure had already been announced last May by sacked managing director Ken Tarus.

Performance contracts

Kenya Power last year said its senior management staff will work on three-year performance-based contracts in a raft of changes aimed at improving accountability.

The power supplier’s senior management previously enjoyed permanent and pensionable terms.

“The heads of the directorates will report directly to the Managing Director and CEO,” said Kenya Power in a statement at the time.

Under the new organisational structure announced in May, the State-controlled utility firm created a commercial directorate department that would be tasked with responding to customer issues, seen as the agency’s response to customers’ complaints about persistent power outages and inflated power bills.

With the new regime announced by Mr Tarus, customers would also be segmented into large, small commercial, domestic and emerging users.

Corporate governance

The changes, Kenya Power said then, were aimed at tightening corporate governance and improving the agency’s response to customers in line with new regulatory changes that prescribe penalties for poor service delivery.

Kenya Power posted a 63.7 percent decline in net profit to Sh1.92 billion in the financial year ended June 2018 on higher costs.

The utility announced recently it will turn to fresh short-term loans to refinance its existing short-term debts on a longer tenor to ease strain on its coffers.

The power distributor has been left in a financial tight spot after it breached the terms attached to Sh59.6 billion worth of its loans. The firm however got temporary relief after obtaining extension agreements for the loan breaches until June.

The short term loans in question are owed to Standard Chartered Bank (Sh50.4 billion), Rand Merchant Bank (Sh7 billion), Stanbic Bank (Sh1.1 billion) and Agence Francaise de Development (Sh1.1 billion).

The Big Four accounting firms, Deloitte, PricewaterhouseCoopers (PwC), Ernst & Young (trading as EY) and KPMG, collectively earned more than Sh180 million in plum government contracts last year.

KPMG was the biggest beneficiary of State contracts with Sh93.5 million earned from professional fees.