Contractor owed Sh697m for Garissa solar power project — report

The Rural Electrification and Renewable Energy Corporation accumulated Sh697 million pending bills for a solar power project in Garissa.

Auditor General Nancy Gathungu in her report for the year ended June 30 2020 said the amount constituted retention fees, which have been outstanding for a long time.

Retention fee is a percentage (often three or five per cent) of the amount certified as due to the contractor on an interim certificate, that is deducted from the amount due and retained by the client.

The purpose of retention is to ensure that the contractor properly completes the activities required of them under the contract.

Gathungu said a supplementary agreement between the contractor of the Garissa Solar Power Plant Project and REREC placed the retention fees at five per cent of the contract price.

She said a retention money guarantee was duly executed by the contractor on January 9, 2019, and was expiring in November last year.

“However, at the time of the audit the retention money remained unpaid to the contractor,” she said.

Gathungu warned that further delays to pay the contractor could result in a legal suit against the corporation for breach of contractual terms.

The Garissa Solar Plant is the largest grid-connected solar power plant in East and Central Africa.

Kenya developed a major solar power plant to harness its abundant solar energy resource to diversify the power generation mix and reduce energy costs.

Currently, the project is contributing about two per cent of the national energy mix and has significantly led to a reduction of energy costs thereby promoting the development of clean, reliable, sustainable and affordable electricity.

Gathungu further said the project’s final budget for the year was Sh722 million but no amount was disbursed resulting in nil activities in the undertaking.

“Management has attributed the under-funding to failure to make payments for invoices that had been processed but had not been honoured,” she said.

She added, “Under circumstances, the closure of the project which is already commissioned may take longer beyond the project completion date which is almost due in August 2022”

The project is being financed by China Exim Bank through the National Treasury and International Development Association.

It will increase access to safe and sustainable electricity towards the realisation of the country’s Vision 2030.

It also seeks to replace the costly power from Garissa Diesel Power Station being managed by the Kenya Electricity Generating Company Limited. 

Further, it seeks to offer voltage and grid support to the northern frontier counties and reduce the cost of electricity while boosting reliability.

Upon full completion, the plant is projected to generate 76.4 Gwh meeting the demand of 70,000 households, equivalent to 50 per cent of Garissa town residents.

The project duration is seven years with an approved budget of Sh13.5 billion.

Edited by Kiilu Damaris