The Auditor-General has flagged Kenya Power over a controversial land lease deal involving a prime 2.9654-acre plot in Nairobi.
The deal, valued at Ksh 3.7 million per acre annually, has been criticized for being significantly below the market rate of Ksh 8.7 million per acre.
Over a 10-year period, the agreement is set to generate Ksh 110 million for Kenya Power, compared to the Ksh 257.9 million it would have earned had the land been leased at market value.
This discrepancy amounts to a Ksh 147.9 million potential loss.
Auditor-General Nancy Gathungu revealed that internal Kenya Power valuers conducted the land valuation in February 2023, contradicting a more favorable independent valuation done in 2020.
She criticized the use of internal valuers, citing concerns over compromised independence and objectivity.
The decline in the rental value remains unexplained, raising questions about the rationale and transparency behind the lease agreement.
In addition to the underpriced lease, Kenya Power’s land management practices have come under scrutiny.
The company owns extensive freehold and leasehold parcels valued at Ksh 785.7 million as of June 2024.
However, it has yet to secure title deeds for 16 plots worth Ksh 29.7 million.
The lack of titles is attributed to delays in land demarcation and adjudication processes, leaving these assets in a precarious legal position.
The challenges are not confined to undervaluation and administrative inefficiencies.
Rent recovery from tenants has proven to be a persistent issue.
In Mombasa, 38 tenants vacated Kenya Power properties, leaving behind rent arrears totaling Ksh 13.9 million.
Some of these arrears have been outstanding for as long as eight years.
Despite this, Kenya Power has not presented a concrete strategy for recovering the lost revenue, further exposing its weak asset management framework.
This situation raises broader concerns about governance and accountability within Kenya Power.
With public scrutiny intensifying, questions linger over the decision-making processes and the systemic issues that allow such massive revenue losses to occur.
While the Auditor-General’s report highlights these deficiencies, it also points to a pattern of missed opportunities and inefficiencies that undermine the company’s financial performance.
These revelations add to the growing challenges Kenya Power faces as it struggles to maintain financial stability.
The company’s inability to capitalize on its valuable land portfolio, coupled with its lax approach to rent recovery, paints a picture of mismanagement.
This raises significant concerns about its commitment to protecting public resources and maximizing returns on its assets.
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