Rural Electrification Authority workplaces in Lokitaung, Turkana County. FILE PHOTO | JARED NYATAYA | NMG

The Rural Electrification and Renewable Vitality Company (REREC) spent Sh1.3 billion, which the Treasury diverted from the Petroleum Improvement Fund, on 245 rural electrification tasks.

Auditor-Common Nancy Gathungu has flagged the irregular utilization of the Petroleum Improvement Fund by REREC, saying the cash is supposed for the event of frequent amenities for the distribution or testing of oil merchandise and issues regarding the event of the oil trade.

She mentioned utilisation of the Petroleum Improvement Fund was opposite to Part 4(4) of the Petroleum Improvement Fund Act 2012, and the State company breached the legislation.

The Treasury final 12 months diverted Sh2.074 billion from the Petroleum Improvement Fund to different State businesses, draining money meant to cushion customers towards excessive gasoline costs.

The Treasury had, in 2020, diverted one other Sh18.1 billion from the Petroleum Improvement Fund to fund the working prices of the usual gauge railway.

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“Notice 8 to the monetary statements signifies that the company obtained an quantity of Sh1,359,000,000 from the Petroleum Improvement Fund, which was utilised on implementation of 245 rural electrification tasks,” mentioned Ms Gathungu within the newest audit on REREC books of accounts for the 12 months to June 2021.

Ms Gathungu mentioned this was opposite to Part 4(4) of the Petroleum Improvement Fund Act 2012, which states that there shall be paid out of the Petroleum Improvement Funds such monies as are needed for the event of frequent amenities for distribution or testing of oil merchandise and issues regarding the event of the oil trade.

“Within the circumstances, administration was in breach of the legislation,” mentioned Ms Gathungu in a report dated September 26, 2022, tabled in Parliament.

An audit report on the Petroleum Improvement Fund launched final February revealed that REREC, the Ministry of Vitality, the Nuclear Energy and Vitality Company, the Kenya Vitality Sector-Surroundings and Social Accountability Programme and a few undisclosed non-public corporations have been the beneficiaries of the Sh1.359 billion within the newest diversion.

Ms Gathungu mentioned no paperwork have been tabled to indicate how the funds have been utilized by the businesses and the non-public firm.

REREC was the largest beneficiary of the most recent diversion at Sh1.359 billion adopted by the Ministry of Vitality at Sh500 million.

The Nuclear Energy and Vitality Company obtained Sh130 million, the Kenya Vitality Sector-Surroundings and Social Accountability Programme bought Sh50 million, and the unnamed firm pocketed Sh35 million.

The Petroleum Improvement Fund Act 1991 requires that the fund be used to help a subsidy when gasoline costs skyrocket and infrastructure upgrades within the petroleum sectors, making the transfers to REREC unlawful.

The fund is a particular scheme created to defend customers towards the excessive prices of gasoline and is supported by the petroleum improvement levy, which was elevated to Sh5.40 a litre in July 2020 from Sh0.40.

The diversion piled extra strain on the gasoline subsidy scheme as the federal government has since 2021 grappled with a scarcity of funds to completely compensate oil entrepreneurs for holding pump costs unchanged.

The subsidy was meant to cushion motorists from rising world gasoline costs on the again of a speedier-than-expected financial restoration following the Covid-19-induced financial fallout.

Kenya began stabilising gasoline costs within the month-to-month assessment that ended April final 12 months however the subsidy scheme has confronted cash-flow hitches attributed to unlawful diversions of money meant to compensate the oil entrepreneurs.

The Treasury manages the Petroleum Improvement Fund however lawmakers have proposed adjustments to legal guidelines governing the petroleum trade that can, amongst others, set up an unbiased physique to handle the fund.

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MPs final 12 months directed the Treasury to compensate motorists for the Sh18.1 billion that had been diverted to fund the working prices of the SGR.

The Treasury advised Parliament that the diversion of the funds depleted the fund, resulting in the discontinuation of the gasoline subsidy scheme within the month-to-month assessment to October 14 final 12 months.

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