PAC Investigates Ksh 290 Million Overfunding in Donor-Funded Energy Project

The National Assembly Public Accounts Committee (PAC) has launched a detailed investigation into the Energy Ministry’s handling of funds for a donor-funded project after a significant financial discrepancy came to light. The issue centers around an additional Ksh 290 million that the State Department for Energy received from the National Treasury, raising questions about transparency and financial management.

An audit conducted by the Office of the Auditor General revealed that while the State Department for Energy had initially budgeted Ksh 90 million for the project, it was allocated Ksh 378 million. This resulted in an over-funding of Ksh 288 million. Auditor General Nancy Gathungu has expressed skepticism regarding the explanation provided by the ministry, which claimed that the excess funds were mistakenly allocated to their project instead of another entity.

During a recent PAC session, chaired by Tindi Mwale, the committee scrutinized the accounts of the State Department for Energy for the financial year ending June 30, 2022. The session saw sharp questioning of Energy Principal Secretary Alex Wachira about the erroneous over-funding and its implications. Rarieda MP Otiende Amolo pressed PS Wachira on how such a substantial error occurred and which other entity might have been involved.

The Energy PS struggled to provide a satisfactory explanation for the “genuine error,” and the committee found the department’s written responses lacking in detail. The written responses did not address the extra funds adequately, leading MPs to demand more transparency. “You could have attached evidence to explain this further. The question we are asking is; did it go back to the sender or did it disappear from the Treasury?” Soy MP David Kiplagat questioned.

KEEP READING: How Europe’s Finance Sector Can Prepare for the Future

Further complicating matters, MPs also addressed the issue of under-absorption of the funds initially allocated. Despite receiving Ksh 90 million, only 50% of this amount was utilized. The ministry attributed the under-absorption to complexities in the procurement process. However, this explanation was met with skepticism, as it did not align with the detailed written responses provided by the department.

PS Wachira attempted to clarify that the project in question had been completed and the unused funds were returned to the National Treasury. He assured the committee that the procurement procedures followed adhered to World Bank guidelines, which require approval at each stage of the project. Despite this, MP Otiende noted that the response lacked the necessary detail to align with the written explanations provided.

Treasury officials present at the meeting, including CPA Lawrence Kwiriga Kimathi, indicated that instances of erroneous overfunding were not common. Kimathi affirmed that the Treasury intended to regard the overfunding as an error, emphasizing that such occurrences were rare.

The PAC’s investigation aims to uncover the full extent of the financial irregularities and ensure accountability. The committee is also examining the agreements between the Treasury and the World Bank to understand the terms and conditions associated with the funding.

This investigation highlights ongoing concerns about financial management within government projects, particularly those involving donor funds. The PAC’s findings could have significant implications for how such projects are managed and audited in the future, emphasizing the need for rigorous oversight and transparency in the use of public resources.

KEEP READING: Manufacturing Industries: Driving Economic Growth and Innovation