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Kenya Power sends 59 supply chain heads home to aid audit

In 2020, Kenya Power suffered Sh15.99 billion worth of system losses

In Summary
  • The company has appointed a team in an acting capacity to ensure business continuity.
  • The audit is to entrench the principles of value for money, professionalism and accountability into the firm  
The Kenya Power logo.
The Kenya Power logo.
Image: FILE

Kenya Power has suspended all 59 procurement and supply chain heads to pave way for a forensic audit to identify areas of possible revenue leakages.

The company has appointed a team in an acting capacity to ensure business continuity.

In a late Thursday statement, the power distributor said the goal of the forensic audit, which will be done on the procurement systems, stock and staff, is to enhance the robustness of the company’s supply chain processes so as to anchor them on the principles of value for money, professionalism and accountability.  

"As a consequence, and in compliance with the task force recommendations, the top leadership of the supply chain division comprising 59 members of staff has been suspended with immediate effect to pave way for the forensic audit, ‘the power man said.

This comes barely a month after President Uhuru Kenyatta formed a task force to implement findings of the team selected in March to review Power Purchase Agreements between independent power producers and Kenya.

This aims at addressing the cost of electricity, as well as streamlining and strengthening the business, and the sector.

Radical cleanup of the listed power distributor’s procurement and supply chain division is one of the recommendations by the task force led by John Ngumi.

In 2020, Kenya Power suffered Sh15.99 billion worth of system losses beyond what it is allowed to recover from consumers in the year ended June 2020.

The firm’s system losses rose 23.46 per cent in the period, well beyond the 14.9 per cent that the regulator had allowed it to pass on to customers' bills in 12 months.

Besides, the task force also wants Kenya Power to lower the cost of purchasing power from Independent Power Producers (IPPs) with the aim of securing the sector’s sustainability.

Last week, the firm bounced back to profitability, reporting Sh1.5 billion in net earnings for the year ended June 30 compared to a Sh939 million loss last year.

The firm's profit before tax stood at Sh8.2 billion for the period under review, representing a 216 per cent  YoY growth compared to a loss before tax of Sh7.04 billion.

The power provider has attributed the strong performance to growth in sales and revenue, as well as a double-digit reduction in costs and expenses.