MPs query KenGen spending on feasibility studies

Kenya Electricity Generating Company (KenGen) is on the spot over Sh370 million it spent on feasibility studies, some conducted without the necessary approval from the Ministry of Energy.

KenGen managing director Peter Njenga on Tuesday appeared before the Public Investments Committee on Commercial Affairs and Energy, where he was required to explain the expenditure flagged by the Auditor General for the 2020-21 to 2022-23 financial years.

The MPs said some of the studies were commissioned without clear plans, land acquisition, or risk assessments.

The Auditor General had raised questions over KenGen’s flagship projects that saw feasibility studies done over 10 years ago but are yet to be effected to date.

The committee chairperson, David Pkosing, led the MPs in seeking to understand the process including who initiated the studies, the strategic plans and procurement records to support and details of the companies awarded the consultancy tenders.

He questioned a 2014 study worth Sh163 million, saying the Ministry of Energy did not approve it but KenGen wants new consultants to update it.

Nyeri Town MP Duncan Maina sought reasons why consultants were hired before critical requirements, which undermined the credibility and utility of the studies.

“KenGen proceeded to undertake a feasibility study before identifying where the project would be located. How do you spend millions without knowing where the project is going?” posed Maina.

"Could KenGen justify spending more money to update a study that should never have proceeded without the ministry’s green light in the first place? This cycle of feasibility studies has become a money pit,” he added.

But Njenga defended the projects, saying the country’s energy demand keeps rising, which calls for new investments.

According to him, the studies were not only part of long-term strategic planning but were also aimed at identifying energy generation potential, especially from wind and solar sources.

He insisted that the said projects are in the company’s strategic plan, even as he admitted that projects such as the proposed Meru Wind Farm stalled owing to land acquisition challenges, despite studies being done several years earlier.

To also explain the audit queries, KenGen General Manager for Strategy and Projects, Elizabeth Muli, said the feasibility studies helped identify optimal project sites and informed subsequent land acquisition.

However, MPs were not convinced by the explanation, saying the National Land Commission (NLC) was not always involved in the process.

The committee also questioned the performance of Ngong 1 phase 3 where there was construction of a 10MW wind farm with evacuation infrastructure to Kimuka substation, which was started in 2017.

The amount under review was Sh20 million.

But the management said the terms of reference for acquisition of the consultant to conduct the feasibility study were developed and a site visit with KfW was conducted in December 2023.

“In a letter dated October 2023, KCAA requested for the relocation or decommissioning of existing turbines and no further development on the proposed 10MW site due to frequency interference with navigation equipment located near the site.

"An independent study to confirm KCAAs finding is in progress. Once completed, the feasibility study for the 10MW wind will commence,” KenGen explained.

MPs questioned how much of the Sh57 billion allocated for the project had already been sunk, especially after aviation authorities raised objections about turbine interference with flight signals.

“Are we looking at a white elephant? Who will pay for these mistakes if the entire project is halted?”

The committee demanded full disclosure, including the names of consultants paid, the terms of reference for each study, and whether those projects have yielded any return on investment.