- The project is at risk of incurring significant interest costs and penalties with their continued delay in payment
- Failure to settle bills during the year to which they relate distorts the financial statements
Image: GEORGE MURAGE
The Kenya Electricity Transmission Company accumulated bills totalling Sh4.57 billion for its Eastern Electricity Highway Project during the year that ended June 30, 2020.
Auditor General Nancy Gathungu said the management did not explain why the bills were not settled within the year.
“The project is at risk of incurring significant interest costs and penalties with their continued delay in payment,” she said.
The Kenya-Ethiopia Electricity Highway Project, also known as the Eastern Electricity Highway Project, involves the construction of a 1,068 kilometre power transmission line from Ethiopia to Kenya.
The line— 433 kilometres in Ethiopia and 612 kilometres in Kenya — is the longest in East and Central Africa.
Kenya-Ethiopia line will allow hydropower imports from Ethiopia in line with a state-to-state agreement entered in January 2012. Ethiopia could also request the country's geothermal power.
In her report, Gathungu said failure to settle bills during the year they relate to distorts the financial statements and adversely affects the budgetary provisions for the subsequent year as they form the first charge.
The auditor general noted that Ketraco made payments totalling Sh10.80 billion during the year under review to settle various bills.
She noted that compensation to landowners for wayleaves since the inception of the project amounts to Sh2.365 billion out of which Sh2.387 billion was certified as payable.
She said project management has so far paid Sh2.32 billion leaving an unpaid balance of Sh66.2 million.
“The management has attributed the failure to pay the amount to lack of budgetary allocation from the National Treasury and lengthy land valuation negotiations due to absentee landowners and various court injunctions on disputed cases,” she added.
Ketraco is mandated to plan, design, construct, own, operate and maintain high voltage electricity transmission grid and regional power interconnectors that form the backbone of the National Transmission Grid.
The Eastern Electricity Highway project incorporates two alternating current/direct current converter stations at both ends. On Kenya’s side, it’s being built by Ketraco.
It’s set to be the region’s first 500kV high-voltage direct/current line.
Currently, the 400kV Loiyangalani-Suswa 435 kilometre line built last year and connecting Turkana wind farm to the national grid has the biggest capacity, along with the 400kV Mombasa-Nairobi 428 kilometre line completed in 2017.
Direct current transmission is best suited to cover long-distance electricity transportation, over 600km on land, in line with global best practices.
This is because direct current conductors come with the benefit of lower power losses compared to alternating current transmitters which, though cheaper, tend to easily heat up, resulting in heavy losses during electricity transportation. This is especially so for lower voltage cables.
The line, interconnecting at the Moyale common border, has the capacity to carry 2,000 megawatts of electricity in either direction, the capacity being higher than Kenya’s current maximum consumption of about 1,900 MW.