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No Alarm Over Idle Projects, KenGen Reacts To Auditor General’s Queries



Electricity generating company KenGen has defended its stock of idle assets which were highlighted in an audit of its books for the year ended June by the Office of the Auditor General (OAG).

In response to the disclosures, KenGen says idle geothermal wells valued at Ksh.79.3 billion are to be incorporated into future power generation projects.

“Energy projects, especially geothermal infrastructure, require significant lead time during which geothermal steam resources must be harnessed and availed to guide plant specifications and conclusion of financing agreements and terms,” the company said on Thursday.

Examples include 83MW Olkaria I unit 6 to be commissioned by end of the year, 140MW Olkaria VI project, 50MW Olkaria I Rehabilitation among others. “These are a long-term investment that will go a long way in making Kenya green and also reduce the overall cost of power in the long run. On the case of the hydro plaza, the project has since been completed and officially handed over to the company and is now fully occupied.” KenGen says.


On transmission lines, KenGen says that notably Sondu and Olkaria the respective loans are currently being paid by the transmission company and negotiations for transfer of both the underlying loans and lines are at advanced stages.

KenGen says it has dug an estimated 319 geothermal wells which have been subsequently assigned to current and future projects.

In her audit of Kengen books, Auditor General Nancy Gathungu noted the vacant geothermal wells offer no value for money even as KenGen services a loan taken from the Export-Import Bank of China (EXIM) for the investment.

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The idle geothermal wells were flagged alongside other projects whose value rounds off to Ksh.99.3 billion and which the audit fingers as likely incomplete projects.

The projects include Ksh.4.5 billion deployed in the construction of Soundu and Olkaria transmission lines which are currently used by a third party for revenue generation.


According to the audit report, KenGen did not provide explanations to auditors on why the projects had not been completed and capitalized.

KenGen financial statements through 12 months to June 30, 2021, earned a qualified opinion after the company failed to revalue its power, plant and equipment for depreciation, a matter the electricity generating company blamed on COVID-19 related disruptions.

The lack of inclusion for the depreciated assets which are factored in the calculation of net earnings means KenGen real earnings in the period are much lower than the reported net profit of Ksh.1.3 billion for the period.

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