Characteristics of Mega Projects and their Influence on Finance Mobilization in Parastatals in Kenya’s Energy Sector

Abstract

The energy sector is very critical to the socio-economic development of the country. Most mega project under the purview of this sector are a testament to its importance. Several such projects, however, have delayed, others have stalled while several others are dogged by scandals ranging from embezzlement of funds by the persons entrusted in their implementation to stakeholders exhibiting divergent interests in the projects. On this premise, this study evaluated the influence of various mega project characteristics on mobilization of finances required in project implementation. The specific objectives included to examine the influence of financial risks, project costs, financial goal orientation and stakeholder analysis on financial mobilization among parastatals in the energy sector. Additionally, the study examined the moderating effect of annual budgeted project costs on the relationship between mega project characteristics and finance mobilization. The study was guided by financial risk theory, agency cost theory, goal setting theory, stakeholder theory, resource dependency theory as well as resource mobilization theory. The study employed cross sectional survey research design where project managers working in all mega projects in Kenya’s energy sector were targeted. Positivism philosophy was also adopted to guide the study. A census survey was conducted on the 32 project managers. A structured questionnaire and secondary data collection sheet were employed to facilitate data collection. The questionnaire was tested for validity and reliability. The collected data were analyzed using the Statistical Package for Social Sciences tool. Descriptive statistics as well as inferential statistics were used to analyze the data. The results of the aforesaid analyses were presented in graphical and tabular forms. Additionally, the null hypotheses were tested at 95% confidence level. The primary and secondary analytical results were triangulated for comparison purposes. According to the study findings, it was observed that correlation results of all predictor and dependent variables using primary data were statistically significant whereas only project costs and financial goal orientation correlated significantly against finance mobilization when secondary data were analyzed. Whereas when using primary data, three mega project characteristics had statistically significant effect on financial mobilization only the effect of project costs and financial goal orientation on finance mobilization was statistically significant when secondary data were analyzed. The moderation effect on annual budgeted project costs on finance mobilization was found not to be statistically significant. It was concluded that project costs and stakeholder analysis were very critical with regard to mobilization of finances for mega projects irrespective of primary and secondary data respectively. According to the views of project managers, it was inferred that financial risks involving mega projects were the least important in financial mobilization. However, the factual data collected from audited financial reports led to the conclusion that though financial goal orientation had the highest factor value in reference to finance mobilization, it was the least crucial mega project characteristic. Moreover, it was deduced that annual budgeted project costs did not have statistically significant effect on the relationship between mega project characteristics and finance mobilization. The study recommends that there ought to be increased emphasis on financial risks especially parameterized by interest rate, project costs as expressed by average initial cost and stakeholder analysis operationalized by profits generated annually. The foregoing is bound to result in improved mobilization of infrastructural finances required to initiate and implement mega projects in the energy sector in Kenya.