Kenya Power breached procurement laws when it awarded Sh228.9 million worth of contracts to thermal power generators in Marsabit and Wajir, according to an audit of the company’s financial statements.
The Nairobi Securities Exchange-listed firm also revised the value of one of the contracts upwards by Sh24.7 million barely seven months after signing the deal.
The Auditor-General Nancy Gathungu says Kenya Power signed the off-grid thermal generation contracts for Marsabit and Wajir on July 30, 2025 and October 13, 2025 respectively.
The company’s management had initiated procurement before expiry of existing contracts by requesting funding from the Ministry of Energy and Petroleum on September 30, 2024.
Kenya Power was, however, unable to conclude the contract before the existing agreements expired owing to delays in obtaining confirmation of funding from the State Department of Energy and the lack of timely budgetary allocation for the off-grid power stations.
To maintain uninterrupted electricity supply, existing suppliers continued providing generation services.
Kenya Power then resorted to direct procurement and executed contracts with retrospective commencement dates to regularise the services already rendered.
The Auditor-General said this action did not meet the competitive procurement requirements of Section 91(1) of the Public Procurement and Asset Disposal Act, Cap. 412C.
She added that retrospective commencement dates were inconsistent with Section 139(3) of the Act, which prohibits procurement approvals from operating retrospectively except as provided by law.
“Further, on March 1, 2026, the Marsabit contract was varied upwards from Sh99,029,949 to Sh123,787,437, representing an increase of Sh24,757,487, barely seven months after execution of the contract on July 30, 2025,” the Auditor-General said in the report dated September 17, 2026.
“The upward variation was made within twelve months of contract execution contrary to Section 139(3) of the Public Procurement and Asset Disposal Act, Cap. 412C.”
The contracts awarded to the thermal power suppliers is the latest instance of irregular procurement at the company in which the government has a controlling 50.1 percent stake.
The Auditor-General found irregularities in Kenya Power’s purchase of $18.9 million (Sh2.4 billion) worth of heavy fuel oil covering the period from July 1, 2018 to June 30, 2021.
The issues highlighted included locking out lowest cost bidders and overpayments to some of the independent power producers which in turn resulted in recovery of the amounts from consumers.
Besides consumers, other victims of Kenya Power’s procurement misdeeds are its shareholders who have had to absorb the cost of the financial leakages.
The government, which is the top shareholder, has on some occasions contributed to the procurement losses at Kenya Power including delays in approving funding for the thermal power contracts.
Kenya Power has, however, achieved substantially higher profitability in the past three years compared to earlier years despite the procurement leakages.
The company reported a 2.1 percent net profit growth to Sh24.9 billion in the year ended June 2026 when its sales increased 8.6 percent to Sh238.2 billion.
Cost of sales rose by Sh7.9 billion to Sh152.6 billion while operating costs jumped by Sh11.3 billion to Sh53.7 billion.
The company is paying a total dividend of Sh1.50 per share for the review period, up from Sh1 per share paid for the prior year.
Kenya Power resumed dividend payments in the year to June 2024 when it emerged from a long period of losses and low earnings.
