Before new World Bank Loan announcement Kenyan Parliament Grills Asst Minister over issue of whether the gov’t is paying costs to the benefit of private shareholders of Kenya Power & Light

From the Official Actions of the Parliament, April 14, 2010 (The Hansard)

QUESTIONS BY PRIVATE NOTICE
RELATIONSHIP BETWEEN KPLC AND RURAL ELECTRICITY AUTHORITY
Mr. Washiali: Mr. Speaker, Sir, I beg to ask the Minister for Energy, the following
Question by Private Notice.
(a) What is the relationship between Kenya Power and Lighting Company
(KPLC) and Rural Electricity Authority (REA)?
(b) How much money has the Ministry paid to KPLC through the REA since its inception
to date?
(b) Could the Minister also provide details of the amount paid as dividend to the major
shareholders of KPLC since its privatization?
. . . .
Mr. Washiali: Mr. Speaker, Sir, I would like to thank the Assistant Minister for the
answer given and at the same time appreciate the services that we have received from both the
REA and the KPLC. However, what this Question wanted to address was the relationship
between the KPLC and REA but it has not been very clear because what forms the biggest cost
for new customers for the KPLC when they are connecting is connection charges. In our
constituency, you will find that we have had institutions which have applied for power from the
KPLC and then at the end of the day, you find that it is the REA who have brought the power up
to the institution. How then would the institution now applying for the connection of power pay
to the KPLC when it is the REA who have done the real connection?
Eng. M.M. Mahamud: Mr. Speaker, Sir, I appreciate the hon. Member’s concern but I
have mentioned that the REA actually does the work and the actual connectivity to the customers
is done by the KPLC. There is no relationship between REA and any customer.
Mr. Ngugi: Mr. Speaker, Sir, the Assistant Minister has told us that the KPLC is a
private company where the Government is a major shareholder with six other shareholders. The
REA is a Government institution investing in electricity. They do the lines, put transformers and
once they have finished doing that, they hand over all those assets to the private company called
the KPLC. In other words, what REA is doing —
Mr. Speaker: Come to the question!
Mr. Ngugi: Mr. Speaker, Sir, in other words what REA is doing is contributing on behalf
of the Government to assets of KPLC. Since the Government has contributed through REA to the
assets of the KPLC, what do the other six shareholders and others contribute to the assets of the
KPLC for them to get equitable dividends?
Eng. M.M. Mahamud: Mr. Speaker, Sir, that is a good question . . .

. . . .

Dr. Khalwale: Mr. Speaker, Sir, earlier on in this House, we were given a document
which indicated that Transcentury was one of the shareholders of this company. Given that
KPLC is a parastatal, in fact, all its vehicles move around with blue number plates. Could the
Assistant Minister clearly show us the shareholding, especially in view of the fact that
Transcentury seems to crop up everywhere? When a question of impropriety comes up in the
House or in the Public Accounts Committee, you see Transcentury showing its head in the
background. Could he table in this House a list showing how those dividends were shared?
Could he also tell us how Transcentury found itself on board? How much were they paid as
dividends?
Eng. M.M. Mahamud: Mr. Speaker, Sir, the largest seven shareholders of KPLC are the
Kenya Government, which is represented by the Treasury; Barclays Bank of Kenya through
various nominees accounts, the NSSF Board of Trustees, Stanbic nominees, the Kenya
Commercial Bank, Jubilee Insurance and the NIC Services. As regards Transcentury, according
to the books of accounts this year, the annual report of the financial statement for the year ended
30th June, 2009; it is listed as number 16 shareholder with 4.69 per cent. The highest share
percentage is Kenya Government by 40.421 followed by Barclays Bank by 12.81 per cent and 23
per cent for other shareholders not listed in the accounts. But according to the report that I have
here, Transcentury only owns 4.69 per cent. I do not know about the other questions that Dr.
Khalwale is talking about.
Ms. Karua: On a point of order, Mr. Speaker, Sir. Is the Assistant Minister in order to
say that KPLC is a private company when we all know it is a parastatal? The Government has
been the only shareholder until recently, about six years ago, when some people bought shares.
Could he prove to the House the ownership since inception by showing us the records?
Mr. Speaker: Hon. Assistant Minister, that is a valid point of order! You are misleading
the House!
Eng. M.M. Mahamud: Mr. Speaker, Sir, KPLC is not a private company per se. It is a
company limited as opposed to most Government parastatals. It is different because it is listed in
the Nairobi Stock Exchange.

Appreciation is due to Parliament and donors for the fact that this transcript is available on the website. Just days later a new World Bank loan for KPLC was reported in The Standard. At least we can all see that the issues are on the table for the Parliamentarians and cognizant GOK ministers, for the World Bank, as well as for the officers and directors of KPLC and those controlling the privately held shares.

2 thoughts on “Before new World Bank Loan announcement Kenyan Parliament Grills Asst Minister over issue of whether the gov’t is paying costs to the benefit of private shareholders of Kenya Power & Light

  1. Good post. KPLC is a classic case of conversion.

    Have your read Looting the KPLC – The 21st Anglo Leasing?

    It’s the story of the looting of this troubled corporation in which billions of shillings of public investment have been stolen. Since 2001, KPLC has spent billions of shillings buying poles to run electric cable, and mount its transformers. The poles, made of treated wood and concrete, have been sourced from South Africa, Tanzania and Kenya. In Kenyan parlance, the story of the purchase of electric poles could very easily be described as the 21st Anglo Fleecing.

    http://blog.marsgroupkenya.org/?p=33

  2. Thank you. I was not aware of this report from 2007 but have now read it. Good work. Obviously KPLC has been in need of legal oversight for a long time. It is very unfortunate that the KACC did not take action having been alerted to such questionable dealings. It does not do much good to reform public procurement rules if there is impunity for those caught ignoring or circumventing them.

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