Companies
How Kenya Power bid to hire foreign CEO aborted
Thursday December 29 2022
Canadian Don Priestman who served as the chief executive officer at Kenya Power in 2006. FILE PHOTO | NMG
The choice of an expatriate to run Kenya Power split the board and faced opposition in government, forcing the utility back to the drawing board in the search for a CEO.
Kenya Power under the ousted chair, Vivienne Yeda, prepared a shortlist of three foreigners and favoured an Australian as the pick to lead the utility, according to three people familiar with the recruitment.
Read: Treasury triggers Kenya Power chair ouster ahead of AGM
The shortlist followed an executive search led by Deloitte East Africa, which presented the chair of Kenya Power with the results of the screening and a list of six recommended candidates on May 6 that included locals and foreigners.
Ms Yeda weathered opposition from a section of directors on her preference to have an expatriate appointed CEO of Kenya Power and complete the turnaround of the utility.
The top honchos at the Energy ministry under then Cabinet secretary, Monica Juma, also opposed hiring a foreigner for the top job fearing a backlash from nationalists keen on a Kenyan running the sole electricity distributor.
The firm is seeking to replace Bernard Ngugi who quit in August 2021 amid a boardroom fallout that came months after the court dismissed a petition to remove him over past procurement dealings.
The directors who pushed for an expatriate chief executive cited the turnaround of Kenya Power under a foreign CEO, Canadian Don Priestman, tapped in 2006 when many had written off the power utility firm.
Mr Priestman was hired under a World Bank financing package to help turn around a perennial loss-maker in just two years.
Profitability dramatically increased from Sh874 million in 2004 to Sh2.6 billion last year, a complete turnaround for the power distributor that in 2003 was on the verge of collapse, registering a mind-boggling Sh4.1 billion loss, the highest in its history at the time.
Kenya Power posted a net loss of Sh939.4 billion in the year to June 2020, the first loss in 17 years.
It made a profit of Sh3.5 billion in the year to June and has received multi-billion shilling State bailouts to address the liquidity gap left by the reduction of electricity tariffs in January. The cut in power tariffs ends this month.
Kenya Power is plagued with instability on its board and executive suite that has seen directors and managers quit in quick succession.
Mr Ngugi was Kenya Power’s fourth CEO in four years, an instability that could have discouraged top local executives from showing interest in the job.
A source at Deloitte said the requirements for the CEO’s position set by Kenya Power made it necessary to widen the search abroad.
“The requirements for the job made it difficult to get five or six local candidates for the shortlist. And, therefore, we had to look beyond Kenya,” said a top executive at Deloitte who sought anonymity.
“We fail to understand the noise around foreigners. We should be fixated on competence.”
The CEO hiring at Kenya Power caught the attention of the Auditor-General, who raised the alarm over the secrecy of the Deloitte report.
“No documentary evidence including reports of the consultant, evaluation results, recommendation of the consultant and board minutes and resolutions on the matter were not provided for audit review,” Auditor-General Nancy Gathungu said in an audit of Kenya Power books for the year to June.
She says Deloitte was paid Sh2.98 million to lead the CEO search.
“The expenditure incurred may have been wasteful since the position was yet to be filled,” she said.
“The management should provide all the required documents and information for confirmation.”
The job of picking the new CEO will start fresh under a new board tapped on December 16 following the ouster of directors linked to the Uhuru administration.
President William Ruto allies’ takeover of the Kenya Power board, offered the new administration the chance to pick a CEO of their choice.
Ms Yeda opted to quit the utility after the Treasury chose not to support her re-election at the firm’s annual general meeting that took place on December 16.
Ms Yeda, who was tapped in November 2020 to shepherd the turnaround of Kenya Power, informed investors she will be quitting on the day of the shareholder meeting.
