Budget cuts hamper energy projects

Budget cuts hamper energy projects

Overriding government needs has seen funding for the energy sector slashed with a number of projects expected to stall.

According to the ministry of energy, funding especially from foreign debt had been slashed by 78 percent from Sh81.2 billion to Sh17.9 billion.

Projects will stall given that implementation is ongoing and that commitment has already been done and is way above Sh17.9 billion.

The ministry stressed this was a huge drop that would most certainly affect implementation of projects in the ministry.

Appearing before the Parliamentary Energy and ICT Committee on Tuesday, Energy Cabinet Secretary Charles Keter said the under funding for the ministry would see a number of projects stalled and fail to meet their deadlines.

“These huge budget cut especially to foreign financed projects will most likely lead to escalation of pending bills, litigations, increased costs of projects due to charging of interest for delayed payments and generally extension of completion period for projects, ”Mr Keter said.

The budget cuts have affected the ministry’s pending bills with only Sh3.4 billion released against a request for Sh13.9 billion.

The Rural Electrification Authority has also seen its development budget request for Sh10.2 billion shelved.

Treasury has at the same time not released Sh28.9 billion required for installation of transmission lines, geothermal development projects worth Sh7.2 billion and counterpart funding for the foreign financed projects for Sh0.4 billion.

Mr Keter said the budget cuts would lead to numerous litigations with contractors and foreign financiers penalizing for delayed payments.

“So far we have already exceeded the Sh17.9 billion ceiling you have proposed and thus we have pending payments to date. Considering that we still have another five months to implement projects in this financial year it is imperative that this ceiling be reviewed upwards,” Mr Keter stressed.

“There are projects like Loiyangalani- Suswa transmission line which have to be completed to avoid realization of contingent liability, we need to avoid this eventuality,” he added.

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