A heated standoff erupted in Parliament after Treasury Cabinet Secretary John Mbadi defended the transfer of Sh55 billion and key State energy agencies to the newly created National Infrastructure Fund, with MPs warning the move could cripple the Energy Ministry and throw the sector into uncertainty.
Members of the National Assembly Energy Committee questioned the Treasury over the decision to remove major agencies from the Ministry of Energy and Petroleum Development and place them under NIF, a fund that is still not fully operational.
Among the agencies affected are Kenya Electricity Generating Company, Kenya Power, Kenya Electricity Transmission Company and Geothermal Development Company.
The committee, led by Nakuru Town East MP David Gikaria, argued that the changes had stripped the ministry of most of its development budget and raised fears over the future of workers and ongoing projects.
“The transfer of the agencies may reduce the ministry to a shell with employees paid for doing nothing,”said Gikaria.
Lawmakers also expressed concern over the Petroleum State Department following the sale of the government’s 65 per cent stake in Kenya Pipeline Company through an Initial Public Offer completed in February 2026.
The department has now been left with National Oil Corporation of Kenya and Energy and Petroleum Regulatory Authority, both of which MPs described as financially strained.
Gikaria accused the Treasury of pushing through an unlawful transfer of Government-Owned Enterprises and their budgets into NIF before the fund becomes operational, warning the move could eventually result in job losses.
The Parliamentary Budget Office also raised concerns, saying the restructuring interferes with the constitutional budget-making process.
Committee vice chairperson Lemanken Aramat questioned whether Parliament had approved the changes before implementation.
“Are we not rushing this process? We have budget cuts in the energy sector. What I am worried about is whether the National Treasury followed due process in doing what they are doing,” said Aramat.
Mbadi defended the decision, insisting the projects being moved are commercially sustainable and should no longer depend on direct government funding.
“There was an Executive discussion and a decision was made on this matter,”the minister said.
“Commercially viable projects need not be funded by our taxes. We have taken the projects out of the budget to NIF to free up resources to deserving cases like health and education, among other areas,”said the CS.
He told the committee that the government was changing how projects are financed and warned that resistance to the plan could slow efforts to stabilise the country’s finances.
“We allow Semi-Autonomous Government Agencies to implement projects on their own balance sheet. The projects will still be funded, only that the financing model is shifting,”he said.
Under the 2026 Budget Policy Statement approved by Parliament in March, the State Department for Energy had initially been allocated Sh78.3 billion for the 2026/27 financial year, including Sh13.3 billion for recurrent spending and Sh64 billion for development projects.
However, the latest budget estimates tabled before the House show the allocation has fallen to Sh31.52 billion after the agencies were moved to NIF. The revised figures include Sh13.3 billion for recurrent expenditure and Sh18.2 billion for development.
The State Department for Petroleum had earlier been allocated Sh30.23 billion, made up of Sh20.4 billion recurrent expenditure and Sh9.84 billion for development projects.
The current estimates have reduced the allocation to Sh22.4 billion for recurrent spending, with no money set aside for development.
Nambale MP Geoffrey Mulanya questioned why the Treasury did not brief the committee before carrying out the changes.
“These cuts are affecting key areas like electricity. Are you saying that this sector is not important and that is why you are taking it elsewhere?”Asked Mulanya.
Embakasi South MP Julius Mawathe also questioned why money was being removed from critical sectors and transferred to a fund that is yet to fully start operations.
The changes also faced resistance from Energy Principal Secretary Alex Wachira and Petroleum acting Principal Secretary Mohamed Birick.