The Ministry of Energy and Mineral Development faced sharp scrutiny Friday as the Public Accounts Committee questioned inconsistencies in the accounting of 17.3 billion shillings in government counterpart funding for a rural electrification project.
The committee, chaired by Kassanda North MP Patrick Nsamba Oshabe, examined the Auditor General’s report for the fiscal year ending June 30, 2025. Officials led by Permanent Secretary Eng. Irene Pauline Bateebe struggled to reconcile discrepancies between the audit findings, the project’s financial statements and the ministry’s own submissions on how the funds were spent.
At the centre of the inquiry was government counterpart funding provided under the African Development Bank-supported electricity access project.
According to the Auditor General, government approved compensation worth about 34 billion shillings for Project Affected Persons (PAPs), but only approximately 14.6 billion shillings, about 40 percent of the approved amount, had been paid by the time of the audit.
Ministry officials told the committee that the counterpart funding was primarily intended to compensate landowners affected by electricity infrastructure works, while a small portion financed biodiversity restoration activities, including tree planting.
However, committee members noted that the project’s financial statements indicated the entire 17.3 billion shillings allocated by government had been spent, despite records showing that only 14.6 billion shillings had been paid to Project Affected Persons during the audit period.”Money cannot simply appear without a purpose,” Oshabe told the officials, insisting that every shilling appropriated by Parliament must be fully accounted for.
Officials later explained that part of the counterpart funding had also financed operational activities related to compensation, including property valuation, field verification and facilitation of compensation teams. The explanation, however, failed to satisfy the committee.
“You told us 99 percent of this funding was meant for compensation. Now you are changing the story,” Oshabe said.
The committee raised further questions after ministry officials disclosed that the African Development Bank had authorised the use of an additional 13.48 billion shillings from uncommitted loan funds to finance compensation after government delayed releasing part of its counterpart contribution.
Committee members noted that, taken together, government counterpart funding and the additional donor financing amounted to nearly 30 billion shillings available for compensation. Yet the Auditor General reported that only 14.6 billion shillings had reached Project Affected Persons during the audit period.
“Something is not adding up,” Oshabe observed.”You have government funds, donor funds, yet only a fraction reached the Project Affected Persons.”
Bateebe maintained that the Auditor General’s report reflected the project’s financial position as of 30 June 2025 and that additional compensation payments were made before the project officially closed on 31 March 2026.The committee, however, questioned why the ministry’s written responses submitted to Parliament continued to reflect the earlier figures instead of updated project accounts.
The hearing took another turn after ministry officials revealed that about 32,000 Project Affected Persons remained uncompensated even after the project’s completion.
They told MPs that government has since sought an additional loan of about 33 billion shillings to settle the outstanding compensation claims.
The disclosure prompted fresh questions from legislators, who asked why government was borrowing to finance obligations it had originally committed to meet through counterpart funding.”Government committed itself to finance this component. Why are you borrowing again instead of meeting your own obligation?” Oshabe asked.
Members also questioned how the number of Project Affected Persons increased from an estimated 37,000 to more than 61,000 during project implementation, saying the sharp increase raised concerns about project planning, valuation and compliance with environmental and social safeguards.
Throughout the hearing, Oshabe reminded accounting officers that Parliament’s oversight powers extend beyond issues specifically identified by the Auditor General.
“Parliament is not limited to questions raised by the Auditor General. We are entitled to ask how public money was spent,” he said.
He also criticised ministry officials for appearing before the committee without detailed expenditure schedules despite managing a project worth more than 453 billion shillings. Committee members further questioned why senior project managers were unable to clearly explain how grant funds were allocated for the procurement of electricity meters, cables and connection materials.
The compensation dispute also raises questions about compliance with environmental and social safeguards governing infrastructure projects financed by multilateral lenders such as the African Development Bank, where timely compensation of affected communities is a key requirement before project implementation.
The committee directed the ministry to submit a comprehensive reconciliation detailing the utilization of government counterpart funding, the actual compensation paid to Project Affected Persons, operational expenditures charged against the counterpart funds, biodiversity restoration costs, and the justification for seeking an additional 33 billion shillings loan after the project’s closure.
Under the Public Finance Management Act, 2015, accounting officers are personally responsible for ensuring that public resources are used economically, efficiently and only for purposes approved by Parliament.
