In a strategic move to strengthen governance and facilitate balanced decision-making, Kenya Power has actively sought the expertise of Deloitte & Touche LLP. The objective is to coordinate the integration of independent directors into its board, aligning with recent amendments to the company’s Articles of Association. This signifies not only a crucial shift but also emphasizes an inclusive approach, significantly incorporating the voices of minority shareholders, thereby enhancing the overall shareholder value creation process.

During an Extraordinary General Meeting on November 10, private shareholders approved amendments that depart significantly from the previous board structure. In this new arrangement, four directors will be elected by private shareholders, amplifying the influence of minority stakeholders. However, as the majority shareholder with 50.09 percent ownership, the National Treasury retains substantial control and appoints five directors. This restructuring actively aims to safeguard the interests of both minority and majority shareholders, demonstrating a commitment to robust corporate governance principles.

The appointment of Deloitte & Touche LLP to manage the nomination and election process of independent directors underscores a commitment to transparent, integrity-driven selection. This action goes beyond a procedural change; it strategically positions the board for decisions that align with Kenya Power’s overarching objective – transforming into a commercially viable entity, an essential maneuver to meet governmental goals.

Informed by the government’s unwavering commitment, this initiative aims to decouple development initiatives from operational aspects, enabling Kenya Power to operate on commercial principles. The scope of Deloitte’s involvement in this process goes beyond mere oversight, standing as a testament to their longstanding association with Kenya Power. They have provided indispensable advisory services, notably culminating in the successful execution of a Sh 60 million restructuring service project in 2019.

The International Monetary Fund (IMF) keenly scrutinizes these changes and urges reforms in key state agencies like Kenya Power, setting the backdrop. The IMF’s push for a shake-up in the board intertwines with its obligation to settle approximately Sh26 billion owed to it by the government. In a broader context, this quest for reform is part of an effort by the IMF towards stabilizing Kenya Power, a utility company grappling with financial challenges.

The government committed this year to clearing a substantial portion of the debt, signaling progress towards financial rectitude. Yet, it’s crucial to emphasize that historically, Kenya Power has depended on Exchequer bailouts, exposing a liquidity gap that stood at Sh64 billion as of June in the previous year.

This year, the company positions a potential upward adjustment of electricity tariffs by up to 40 percent as an essential revenue-enhancing strategy. The move stems from the need to secure and sustain critical sector resources. Nevertheless, persistent challenges arise, primarily due to expensive thermal power contracts with Independent Power Producers (IPPs).