Kenya Power employees attending to a faulty transformer in a city estate. Photo/PD
NAIROBI Kenya, Nov 10- Kenya Power is looking to streamline its procurement processes and flag insider dealings through the introduction of new reforms.
The state-owned power distributor now wants all its suppliers delivering goods and services worth millions of shillings to disclose owners and ultimate beneficiaries of these dealings.
“All suppliers and persons selling and or supplying electric power and or other goods and services to the company in excess of an aggregate of Sh1 million per month and or Sh12 million annually shall disclose to the company the ultimate beneficial owner of the supplier and or electric power,” reads a new article that Kenya Power wants to introduce in its governance documents.
The decision to disclose beneficial owners of supply firms, according to Kenya Power is based on provisions under Section 93A of the Companies Act and the regulations promulgated pursuant to the said provision.
“The suppliers shall expressly permit the company to disclose such ultimate beneficial owner in its annual financial reports and or statutory disclosures,” reads the article.
The Companies Act was amended on July 23, 2019 to introduce section 93A which requires every company to keep a register of its beneficial owners containing certain information relating to such owners as prescribed by regulations made under the Act.
A public notice dated October 13, 2020 indicated that the Companies Registry (the Registry) has set January 31, 2021 as the deadline within which companies are required to have prepared and filed their registers of beneficial owners with the Registrar of Companies (the Registrar).
If approved, this decision will take the requirement from a mere filing with the State to public disclosure and elevate scrutiny of entrepreneurs doing business with the electricity distributor.
Disclosing suppliers’ beneficial owners will avail the information for perusal by a diverse group of stakeholders, including shareholders, regulators, activists and competitors of Kenya Power’s suppliers.
Insider dealings are expected to be the first to be flagged in the company’s move to increase transparency.
It is also likely to expose external parties who have been caught in fraudulent transactions with other companies or Kenya Power in the past.
Shareholders will be asked to approve these changes at the company’s upcoming annual general meeting on December 3.
MD & CEO Eng. Jared Othieno cuts a cake to celebrate Customer Service Week 2019 at Stima Plaza banking hall/ Courtesy.
Kenya Power is also seeking to authorise the board to recover the losses against the assets of individuals found “culpable for fraudulent trading with the company including the past senior executives and other senior persons who have served in management in the company.”
This means that former managing directors Ken Tarus and Ben Chumo among scores of top executives who have been arrested and charged in court for alleged corruption and abuse of office may be forced to pay up if found guilty.
This resolution will also expose the faces behind the lucrative procurement deals at the utility firm which spends more than Sh100 billion annually on the purchase of electricity and other goods and services.
Kenya Power says it is sitting on a significant inventory of obsolete stocks, indicating that the company will suffer major losses on some of past procurement decisions.
“Shareholders having considered the accounts for the financial year 2020/21 and 2019/20 are concerned about the high level of slow-moving and obsolete stocks and the inability of the company to write back the provisions taken in 2019/2020 and preceding years,” the company says in its AGM notice.
These, among other reforms, are aimed at tightening the electricity distributor’s processes to ensure the quality of goods meets internal standards and suppliers have a solid reputation and track record, among other checklists.
Kenya Power’s financial position has weakened materially in recent years despite enjoying monopoly status, with corruption and weak corporate governance being cited as one of the major ills bedevilling the company.