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Energy sector faces stagnation as chief executives in limbo

By Macharia Kamau | July 7th 2019
A Kenya Power technician disconnect electricity cables from a fallen pole in Kisumu. Most of the company’s top managers are suspended. [File, Standard]

Two public entities charged with powering the Kenyan economy with electricity and fuel have for the better part of the last year operated without substantive managers, putting at risk their critical operations.

On the face, Kenya Power and Kenya Pipeline Company (KPC) appear to be running smoothly and only disrupted by major hiccups that would appear the norm in the industry such as the billing fraud that may have seen Kenya Power lose Sh150 billion and KPC’s new pipeline leaking at Kiboko.

A closer look however shows that the two entities have been devoid of new projects, with interim managers only pushing on with what their disgraced predecessors had started. This fact might come to haunt the energy industry both in the short and long term as it grapples with gaps left by a year of non-investment by the two entities.

Kenya Power, the electricity retailer and distributor, has had to do without a substantive management team after its former managers were hounded out of office exactly one year ago on allegations of corruption. Officially, they stand suspended, meaning the offices are not vacant and the board cannot recruit replacements.

There is an attempt at a mutual separation between the indicted managers and the power firm, which might see the company part with hundreds of millions in paying the mangers to quit.

KPC has also operated with about half of its management team in an acting capacity for the better part of the last year. The corporation, critical in ensuring the country is well stocked with petroleum products, has a managing director as well as six out of nine general managers in an acting capacity. 

The managing director and two of his general managers had to step aside in December last year after being implicated in corruption cases. Another four, according to the company, resigned in the course of the year for other reasons.

The term of the managing director Joe Sang has however run its course and ended April this year, with the board now preparing to start hiring a new boss - but is still stuck with two senior managers facing corruption charges.

In the case of Kenya Power, Ken Tarus with his entire management team were July last year arrested and charged with different corruption charges, forcing them to step aside. The power firm shortly appointed 13 new managers in an interim capacity and close to an year later, it has not been able to replace them.

The board had proposed a mutual separation and through an agreement and a payoff, the suspended employees cease to be employees even as the court cases proceed.

This would enable the firm to hire their replacement even though it might be an expensive affair, with the company expected to pay more than Sh200 million in ‘severance’ pay. The offer by the board would see the least paid manager take home at least Sh10 million if they accept it. The term of chief  executive Tarus ends July next year.

The interim team has been getting renewals of their terms every few months, the latest being in March when they were given a four-month extension, which is again nearing the end.

Kenya Power Board had then said it had embarked on recruiting a substantive team and would in April commence the hiring process. This was however not to be, with the possibility of the suspended officers challenging a hiring decision on technicalities that they are still employees of the company.

Energy Cabinet Secretary Charles Keter said the board and the indicted employees are finalising the deal, noting that the firm cannot wait for the case to be heard and concluded while being run by an entire management team in an acting capacity.

“We want to get out people who have been there. As it is, we cannot advertise for the positions because they were suspended and the law is clear on this,” he said.

“The board has called for mutual separation because we cannot continue operations this way. Supposing the case goes on for another two years, do we have people acting for the same period of time? They are almost finalising the mutual separation and after that we will advertise for the position that will come with contracts,” said Mr Keter.

It is not an oddity for state officials to step up in acting capacities when their bosses’ positions fall vacant. In 2016, this hit a near crises level when more than 20 major parastatals including key regulatory bodies did not have substantive chief executives.

Among those that served the longest in an acting capacity were Capital Markets Authority Chief Executive Paul Muthaura, who was acting CEO for four years before he was finally confirmed in January 2016.

A proposed law however caps at six months the period an official can stay in acting capacity.

The Public Service Commission (Amendment) Bill, 2019 proposes penalties to discourage state officials from taking positions in interim capacity for too long as well as prompt the Government to move in and appoint substantive officials as soon as possible.

KPC’s top management is made up of an MD and a team of nine general managers. Some of the positions, according to the KPC’s board, fell vacant following resignations by managers for varied reasons.

John Ngumi, chairman of KPC board, said the term of the indicted managing director was set to expire in April this year and its lapse gives the company the green light to hire. He said the board is yet to agree on modalities of dealing with the two suspended managers.

“The MD‘s term expired in April and we had an acting MD to be in place until October,” Mr Ngumi told Weekend Business. “At the same time we have been putting together the terms and they are ready. We will be going to the market shortly for an MD, we want to advertise in July and conclude the process in October.”

He added that recruitment of replacement of the other four managers was put on hold to allow the company conclude a restructuring. The new structure has since been approved by the Energy ministry and the State Corporations Advisory Committee.

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