The African Development Bank which funded Kenya’s Last Mile Connectivity project to the tune of Sh19.6 billion has given it a thumbs up despite audit queries.

The Africa focussed development lender says the Sh65 billion project  being implemented in phases starting October 2016, has delivered almost all of the target outputs and outcomes, particularly those fundamental to the project’s development objective.

This includes improving access to electricity in slums and rural areas in Kenya in the push universal access.

At least 1.6 million households have accessed power under the project, according to the latest Project Completion Report published by the African Development Bank .

Auditor General Nancy Gathungu has however poked holes on the project’s implementation whose fourth phase is currently under tendering process.

While the Covid-19 pandemic slowed down the project, it was marred with poor performance of contracts (delays in project completion), unrealistic loan recovery period, delays in metering and inadequate project awareness among the beneficiaries.

It also had instances of fraudulent use of metres as revenue target fell short by Sh10 billion.

The latest performance report by the Auditor General indicates as of April 2022, the government had collected Sh1 billion against a target of Sh11billion, monies supposed to go into repaying AfDB and the International Development Association (IDA).

The customer connectivity fee under the project was nevertheless subsidised from Sh32,480 to Sh15,000.

A revolving fund was to be put in place to help connect more households with beneficiaries paying connection fee upfront through a loan, whose repayment was to be a deduction of 50 per cent for each electricity token purchased, for a period of 36 months.

Another hitch was huge time lag in processing of tax exception certificates for contractors by Kenya Power, exposing them to increased customs bond fee and storage on imports.

 “The project is at risk of incurring significant interest costs and penalties with the contract delays,” Gathungu said, adding that as of last year, there were demands of up to Sh18.7 million from contractors.

It has also been non-compliant with reports submission set timelines, according to the audit report, hence in breach of the terms of the financing agents.

This has pushed the country’s coverage to an approximate 75 per cent connectivity rate with a slightly above nine million customers connected to the national grid, up from 6.1 million in 2017/17.

Access rate for urban areas is close to 100 per cent, according to official data, while rural Kenya stands at 65 per cent. 

“The project has improved living conditions and helped develop socio-economic activities in the beneficiary communities,” AfDB said.

To most beneficiaries, lighting their homes was a dream come true and less expensive than using paraffin-fueled, with its associated health risks the lender noted.

The project has spurred income-generating activities, such as poultry farming, livestock farming, and grass cutting for cattle and dairy farming.

This has helped to reduce poverty, one of the leading causes of gender inequality.

Activities such as joinery, arc welding and hairdressing salons are just some occupations buoyed by the availability of electricity, the lender added.

 “Overall, despite the major challenges the country went through in 2017-2022, the project delivered almost all of the target outputs and outcomes,” it said.

The project, which also saw the Kenyan government pump in Sh9.3 billion with funding from other partners has added about 18,000 kilometres of low-voltage lines to the distribution system, connecting some 322,279 households and small businesses to the national grid

AfDB has however thrown its weight behind Kenya’s ambitious plan to have 100 per cent electricity access by the year 2030, with renewable energy being the main source accounting for over 80 percent of generation.

Kenya Power in May this year tendered for the fourth phase of the Last Mile electricity connection project, estimated to cost Sh26.8 billion.

It is seeking to connect an additional 280,473 households across 32 counties.

Set to commence in November, it will be fully funded by the Agence Française de Développement (AFD), the European Union (EU) and the European Investment Bank (EIB).