How Ketraco lost Sh13 billion in flawed wayleave compensation scheme

Auditor-General Nancy Gathungu launches Audit Report on Illicit Financial Flows in Africa at Norfolk Hotel on March 10, 2025. [Jenipher Wachie, Standard] Auditor-General Nancy Gathungu has cited massive irregularities in the payment of Sh12.99 billion for wayleave compensation by the Kenya Electricity Transmission Company (Ketraco) Limited in seven donor-funded projects. A forensic audit before Parliament covering 13 financial years, from 2010/11 to 2022/23, indicated that the compensation project was budgeted at Sh17.02 billion, of which Sh4.03 billion remains outstanding to date. Gathungu's audit was expected to establish the accuracy of the long-outstanding wayleave compensations and assess Ketraco's compliance with the law. "Electricity transmission infrastructure is critical for national energy security and economic transformation. Wayleave compensation ensures Project Affected Persons (PAPs) are lawfully and fairly compensated for land, crops, and structures affected by high-voltage transmission lines. Persistent arrears and weak controls in this area risk project delays, litigation, and financial loss to the government," the audit noted. According to the report, other issues raised included a huge variance between the Resettlement Action Plan (RAP) and compensation amounts, lack of documentation for the outstanding wayleave compensation, irregular compensation based on revaluation, as well as overvaluation and overpayment of parcels of land. It also highlighted the absence of guidelines on land revaluations or renegotiations, failure to provide criteria used in sampling parcels of land to be valued, and unsupported payment vouchers. The projects include the Olkaria-Lessos-Kisumu (OLK) transmission line worth Sh5.58 billion, of which Sh2.27 billion is yet to be paid; the Sh2.62 billion Ethiopia-Kenya line, of which Sh2.31 billion has been settled; the Kenya-Tanzania line costing Sh1.64 billion, with Sh1.3 billion settled; the Kenya-Uganda line worth Sh1.84 billion, with Sh478.7 million pending; and the Turkwel-Ortum-Kitale line costing Sh865.3 million, of which Sh650.8 million has been settled. There is also the Nairobi Ring (Suswa-Isinya) project worth Sh2.2 billion, with Sh146.36 million remaining unpaid; the Kenya Power Transmission System Improvement Programme (KPTSIP) project worth Sh2.27 billion, with Sh263.68 million pending; and the Machakos-Konza line, worth Sh55.4 million, of which Sh29.81 million has been paid. At the same time, the audit revealed that the estimated resettlement cost under the RAP was Sh283.1 million, while the final compensation was Sh2.2 billion - an increase of Sh1.9 billion, representing a 663.22 per cent rise. According to Gathungu, the increase may have resulted from poor planning and budgeting during the initial project phase. The audit also stated that a review of the Olkaria-Lessos-Kisumu (OLK) transmission line showed that 19 parcels of land, initially valued at Sh27.9 million, were compensated at Sh41.73 million, resulting in an excess payment of Sh13.9 million. Similarly, a review of valuation reports for the Kenya-Tanzania transmission line revealed that 58 parcels of land had their compensation totalling Sh292.99 million approved for payment. It also established that 14 parcels of land with an initial value of Sh65.9 million were renegotiated to Sh128.63 million, raising concerns about whether the negotiations were based on open market values. In other findings, the audit showed that M/s Realmast Limited was issued with a letter of instruction to undertake the valuation of sampled parcels of land along the Olkalou transmission line. This was despite a review showing that prequalified firms for the provision of valuation services for the period 2015-2017 indicated that M/s Realmast Limited had not been prequalified under this category, in contravention of Section 57(1) of the Public Procurement and Asset Disposal Act.

How Ketraco lost Sh13 billion in flawed wayleave compensation scheme

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