Inside Sh920bn bailouts parastatals owe state

Kenya Railways tops list with outstanding Sh566 billion

In Summary

•Treasury data shows only Sh52 billion repaid.

•Dozens of other entities yet to service their outstanding repayments

National Treasury building
TREASURY: National Treasury building
Image: FILE

State corporations are yet to repay up to Sh920 billion bailout cash that the government – taxpayers, provided the entities to boost their operations and position them for profitability.

Treasury data reveal that the government had as of June 30, 2022, lent the entities more than Sh1 trillion of which Sh973 billion was disbursed.

Of the disbursed amount, only Sh52 billion has been repaid – in some instances the loans were written off, begging the question whether taxpayers would recover the rest.

Kenya Railways alone it is yet to repay Sh566 billion, emerging as holding the largest share of the outstanding guaranteed loans.

Records further show that Kenya Electricity Generating Company (KenGen) is yet to repay Sh81 billion it was bailed out by state.

Kenya Power comes third with an unpaid Sh56 billion followed by Athi Water Services Board which had a pending Sh47.1 billion as of June 30, 2022.

Kenya Airways PLC is also among the biggest debtors with Sh31.2 billion yet to be paid, with reports showing it has not made any repayments lately.

The data, however, differs with that held by Controller of Budget which for instance says Kenya Airways’ guaranteed debt stood at Sh78 billion as of December 30, 2022.

Other fairly large portions are owed by Coast Water Services Board (Sh15.8 billion), Rural Electrification Authority (Sh13.4 billion), Lake Victoria South Water Services Board (Sh12.9 billion), Lake Victoria North Water Services Board (Sh11.6 billion), and Kenyatta University (Sh10.9 billion).

The Kenya Mortgage Refinancing Company is also yet to pay Sh9.9 billion, Sh9.7 billion for the case of Tanathi Water Services Board, and Mumias Sugar Company (Sh3 billion), and about Sh10 billion for irrigation board, water pipeline corporation, and Northern Water Services board.

Treasury Cabinet Secretary Prof Njuguna Ndung’u said the debts will be tracked and assessed against overall sustainability levels of the fiscal commitments.

“The evolving public debt structure and fiscal deficit will inform the review strategy for management of costs and risks of the public debt,” the CS said in a memorandum to Parliament on the 2023-24 budget.

While at it, an audit has unearthed irregularities in the loan records with huge variances spotted in records held by some 18 entities.

“The entities with a total loan balance amounting to Sh268,875,962,951 differed with the loan balance of Sh268,241,119,147 independently confirmed from the entities resulting to unexplained variances,” Auditor General Nancy Gathungu reported after a review of the loans.

Further, some 12 institutions with outstanding balances amounting to Sh14,566,060,517 did not confirm their loan balances as at 30 June, 2022.

They included Uchumi Supermarkets (Sh1.2 billion), Mumias Sugar (Sh3 billion), Local Government Loans Authority (Sh7.6 billion), and NWCPC (Sh2.5 billion) among others.

Gathungu also flagged 12 loans which had no movement at all during the year under review and have remained unpaid over a significant period.

“Further, the management did not provide the aging analysis of the dormant loans,” the auditor said.

The dormant loans totaling Sh13.1 billion are in respect of Agrochemical and Food Company (Sh2.9 billion), Mumias Sugar (Sh3 billion), NWCPC (Sh2.46 billion), Uchumi (Sh1.2 billion), Kenya Meat Commission (Sh940 million), and Miwani Sugar (Sh16 million).

“Management has not disclosed measures put in place to ensure all loans are being repaid and in case of default, sanctions imposed on the defaulters,” the auditor general said in her review of the loans as of June 30, 2022.

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