The Rural Electrification and Renewable Energy Corporation (REREC) has come under renewed scrutiny after the Auditor General flagged it for unlawfully drawing Sh110 million from the Petroleum Development Levy (PDL) in the financial year ending June 2024, its second violation in just a few years.
According to Auditor General Nancy Gathungu, the funds were used to finance rural electrification projects, in clear contravention of the Petroleum Development Fund Act, 2012. The Act specifies that the PDL should only support development within the petroleum sector, including infrastructure and fuel price stabilization.
“Review of financial records revealed that the corporation received Sh110,000,000 from the PDL fund, which was utilised on implementation of rural electrification projects, contrary to Section 4(4) of the Petroleum Development Fund Act,” the report states.
This is not REREC’s first infraction. In the 2020/21 financial year, the corporation accessed Sh1.35 billion from the same fund to cover unspecified expenses, a move that similarly violated the law.
Gathungu emphasized that these diversions were in breach of legal provisions which limit the use of PDL funds to petroleum-related purposes such as building oil distribution infrastructure and stabilizing pump prices during global cost spikes.
The PDL is collected at a rate of Sh5.40 per litre of petrol and diesel, and Sh0.50 for kerosene. These collections are meant to cushion consumers and support the petroleum industry. However, repeated misallocations, including the latest case involving REREC, have drastically depleted the fund.
It remains unclear whether REREC has refunded either of the amounts misused.
The fund’s depletion has had a ripple effect. In recent months, the government was unable to subsidize pump prices, leading to sharp increases. Petrol rose by Sh8.99 per litre to retail at Sh186.31 in Nairobi, diesel by Sh8.67 to Sh171.58, and kerosene by Sh9.65 to Sh156.58.
The Auditor General’s report adds to growing concern over widespread misappropriation of PDL resources. Between 2020 and 2022, over Sh20 billion was diverted for unrelated projects, including Sh18.1 billion to fund Standard Gauge Railway operations, Sh500 million to the Ministry of Energy, and Sh130 million to the Nuclear Power and Energy Agency.
Energy Cabinet Secretary Opiyo Wandayi recently admitted that the government was short of Sh2.5 billion required to support fuel subsidies, a stark reflection of the mismanagement surrounding the levy.
With fuel prices already hitting household budgets hard, the latest revelations have sparked renewed calls for accountability and fiscal discipline in handling public funds, particularly those tied to essential services such as energy and transport.
 has come under renewed scrutiny after the Auditor General flagged it for unlawfully drawing Sh110 million from the Petroleum Development Levy (PDL) in the financial year ending June 2024, its second violation in just a few years.){kind=link}