MP wants answers on Sh350m legal fees, Yeda's tenure at EADB

Treasury Cabinet Secretary Njuguna Ndung'u has been asked to explain why a regional bank where Kenya is a shareholder paid over Sh350 million in legal fees for six years.

Matungulu MP Stephen Mule wants to know if the Director General of East African Development Bank (EADB) Vivienne Yeda was in office legally.

"Could the Cabinet Secretary explain the circumstances that have led to payout of over US Dollars 2.8 million in legal fees between 2014 and 2020, by the East African Development Bank (EADB) of which Kenya is a shareholder?" asked Mule.

The MP, in questions that National Assembly Speaker Moses Wetang'ula directed Committee on Finance and National Planning to respond to in two weeks, asked the Treasury CS to state reasons why EADB shareholders and particularly Kenya, the largest shareholder, had not been paid any dividends during Ms Yeda's tenure.

"State the measures being taken by the ministry to safeguard Kenyan taxpayers' money held at the EADB Bank?" asked Mule.

EADB, which is headquartered in Kampala, Uganda was founded in 1967 as one of the institutions of the defunct East African Community, and is owned by governments of Kenya; Rwanda, Tanzania, Uganda, the African Development Bank and NCBA Group, among others.

In November last year, Baringo North MP Joseph Makilap asked the Speaker to order the Committee on Energy to look into whether the signed agreement between Kenya Power and Lake Turkana Wind Power Project plant contributed to high cost of power during Ms Yeda's tenure as chair.

He noted that Kenya Power had paid LTWP plant, the second biggest supplier of electricity to Kenya Power Sh17 billion for power that was not utilised by Kenyans.

In the petition, the MP also questions Yeda's role as chair of the Kenya Power board, raising concerns that the electricity distributor might be conflicted while dealing with LTWP.

"Is it not a conflict of interest that Ms Yeda, the EADB director general, the bank which... financed the project doubles up as the chairperson of Kenya Power? Was the KPLC chair to supervise the repayment of the loan from the bank? On whose interest was the chair appointed at Kenya Power to represent?" posed Makilap in a letter dated October 7.

Yeda was appointed as director and chair of the Kenya Power board in 2020 while LTWP started feeding power to the national electricity grid in October 2018.

LTWP 2017 kicked up a storm after it demanded payment from the government for Deemed Generated Energy (DGE) after the government failed to put up a transmission line ready in early 2017 as agreed.

The wind power energy generator raised a clause in its PPA with Kenya Power that said the firm would be compensated if the state had not delivered a transmission line between Loyangalani and Suswa by the start of 2017.

This would be a penalty for denying the firm an avenue to monetise its investment by selling electricity to Kenya Power.

Following the delay, LTWP demanded Sh19.87 billion (EUR167 million at current exchange rates) but in negotiations between the Ministry of Energy, LTWP, and Kenya Power, the penalty was negotiated downwards to Sh17 billion (EUR127.6 million).

The government paid EUR46 million (Sh5.5 billion) while the balance would be recovered from consumers in their power bills. This saw the cost of power from the LTWP plant go up by EUR0.00845 (about Sh1) per unit.

The EUR46 million (Sh5.5 billion) lumpsum that the government to LTWP was however in excess.

Both LTWP and the Energy ministry had explained that the penalty was based on estimates of how much power LTWP could produce as there was no data at the time showing patterns of power generation.

Once power generation kicked off, the data collected showed that the penalty that LTWP had demanded should have been less by EUR6.17 million (Sh734 million).

LTWP tried to refund the money but it kept bouncing back, raising questions about possible underhand dealings.

This is the money the MP wants the House to take a fresh look at.