The Kenya Electricity Transmission Company (KETRACO), a state agency in-charge of high-voltage electricity infrastructure, is facing deepening financial distress amid audit findings that point to suspected corruption and unauthorized payments.
- •A review by the Auditor-General for the year ended June 2024, revealed that KETRACO made duplicate compensation payments totaling KSh 10.4 million to individuals affected by its transmission projects, with no intention of recovery or disciplinary action.
- •Separately, over KSh 583 million was transferred to a staff mortgage and car loan scheme managed by a SACCO whose financial records were not submitted for audit, raising questions about possible diversion of funds.
- •These irregularities come against the backdrop of a worsening liquidity crisis as KETRACO’s liabilities exceed its assets by more than KSh 16 billion, placing the firm in a negative working capital position (technically insolvent).
The Auditor-General concluded that that this poses a material uncertainty on the company’s ability to continue operating. The company’s management, however, failed to disclose these risks in its financial statements violating international reporting standards.
In May last year, an unnamed creditor filed an insolvency petition against KETRACO, intensifying pressure on the troubled state utility. The case remains pending before the High Court, with no ruling issued as of the latest audit.
KETRACO’s woes also include an unresolved arbitration award of KSh 9.2 billion that could further strain its ability to meet other financial obligations. Additionally, contingent liabilities from ongoing lawsuits have quadrupled year-over-year to KSh 7 billion, exposing the agency to hefty unbudgeted payouts.
The company’s project execution remains mired in delay. The Nanyuki–Rimuruti cable project, for which KSh 421 million was paid in advance, is just 19% complete, with work halted due to contractor licensing issues. Meanwhile, the Lessos–Tororo interconnector with Uganda has been stalled since 2016, following contract termination and an unresolved KSh 4.2 billion arbitration award.
The audit noted excessive board activity in defiance of presidential guidelines, with 26 board meetings held against a limit of six, resulting in KSh 3.1 million in unauthorized allowances. The agency also failed to contribute the required KSh 2.5 million to a government environmental fund over five years, breaching its own commitments.
Kenya is racing to overhaul its aging power grid, but KETRACO, the state agency in charge, faces a KSh 650 billion funding gap just as public debt pressures mount. The government has begun courting private investors like Africa50 to build key transmission lines, though deals remain stuck in early-stage negotiations. Moreover, a Public-Private Partnership (PPP) deal with India’s Adani Energy struck in November last year was binned after a public uproar.
The company’s 20-year master plan calls for nearly 10,000 kilometers of new high-voltage lines, but financing options are narrowing amid broader mismanagement revelations. Kenya is also among several countries in the region that are invested in the East African Power Pool, an initiative that will link the region’s power transmission infrastructure to ease electricity sharing and trade. As the nation races to meet rising power demand, transmission risks rather than generation have become the grid’s weak link.
