KTDA refutes claims of fund diversion in Sh1bn Settet power projects

The Kenya Tea Development Agency (KTDA) has dismissed allegations that over Sh1 billion contributed by farmers from Kericho and Bomet counties was diverted to projects in other regions, terming the claims false and misleading.

In a statement released on Tuesday, KTDA said all funds raised for the Settet Power Generation Company projects have been fully accounted for and used as intended.

The agency described the accusations by a section of local leaders as “unfounded and contrary to verifiable financial records.”

Settet Power Generation Company Limited, incorporated in October 2010, is jointly owned by seven tea factories, Kapkatet, Litein, Tegat, Momul, Kapkoros, Mogogosiek, and Kapset, together with KTDA Power Company Limited. Each shareholder holds a 12.5 per cent stake in the firm.

According to KTDA, the company was established to develop small hydropower plants that would supply affordable electricity to the factories, helping reduce production costs and boost farmers’ earnings.

Currently, two projects are underway: the 2.5-megawatt Chemosit Small Hydro Plant and the 2.6-megawatt Kipsonoi Small Hydro Plant.

The total equity required for both projects stands at Sh1.1 billion, financed under a 65:35 debt-to-equity structure.

As of October 2025, farmers and factory shareholders had contributed Sh1.03 billion, which KTDA says has been “fully utilized within the two projects in line with approved budgets.”

“In total, Sh1.208 billion has been spent, with a temporary deficit of Sh174 million financed through internal borrowings,” the agency said, emphasizing that all funds remain within the Settet Power projects and none have been diverted elsewhere.

KTDA attributed the project delays to external challenges such as delayed debt closure by international financiers, lengthy land acquisition processes, and transmission wayleave overlaps with Kenya Power.

The agency said financing for the Chemosit project, amounting to USD 8.6 million through an IFC/Proparco/FMO syndicated facility, was finalized in September 2024 after leadership transitions and protracted negotiations.

“With this breakthrough, the Chemosit project has made significant progress, with civil works at 49 per cent and electromechanical installations at 78 per cent completion. The contractor has been fully re-mobilized, and the project is expected to be completed by May 2026,” KTDA stated.

Meanwhile, the Kipsonoi project is also advancing, with land compensation and topographical survey works ongoing as discussions with potential lenders continue.

KTDA reassured farmers in Kericho, Bomet, and other western tea-growing regions that their contributions are “safe, properly utilized, and directed solely toward lowering electricity costs and increasing incomes.”

The agency said all expenditures are audited externally and presented to Regional Power Company Boards, factory boards, and shareholders during annual general meetings.

“KTDA remains fully committed to transparency, accountability, and prudent financial management. These power projects are farmer-owned investments designed to achieve long-term energy self-sufficiency and operational efficiency,” the statement added.

The agency urged political leaders to verify information before making public statements that could mislead farmers or undermine community-driven initiatives.