• In 2012, The Local Authorities Pension Fund (Lapfund) acquired Mariakani Estate as part of a debt swap agreed upon with the now defunct Nairobi City Council.
• This will not be the first time the county government has resorted to selling assets in order to forestall being auctioned.
Image: MAUREEN KINYANJUI
City Hall has been put on the spot over its plan to sell assets as part of its Medium-Term Debt Management Strategy or the next financial year 2022-2023.
Raising concerns, Nairobi Senator Johnson Sakaja through a statement said that selling county assets should not be allowed as it goes against the spirit of devolution.
He wants the Governor, Nairobi Metropolitan Services and involved agencies to appear before Senate and give an explanation on the issue.
“Mr Speaker this statement is very urgent as there is an attempt to sell assets of Nairobi county belonging to the residents. This should not be allowed to happen until the persons concerned appear before senate and explain why they want to sell assets belonging to the residents,” Sakaja noted.
The proposal to sell county assets in order to honor some of its debt obligations is contained in the Medium-Term Debt Management Strategy Paper for the financial year ending June 30th, 2023 that was tabled at the county Assembly last month.
The Ann Kananu led administration had announced that it will be selling idle assets including land to avoid being auctioned by a bank for defaulting on a Sh4.4 billion loan repayment.
This was after the High Court last month granted Kenya Commercial Bank orders to seize and auction City Hall’s assets to offset the loan.
“This paper recommends that we conduct an auction for all obsolete and idle assets and furniture and the proceeds realised be used to reduce the outstanding loan,” read the debt strategy paper in part.
As a result, Sakaja wants the Senate Committee on Finance and Budget to give a detailed status report of all assets and liabilities owed by Nairobi City County directly, through its agencies and through the NMS.
The committee should also outline the strategies put in place by Nairobi City County towards settling all its debts which are currently standing at Sh76.9 billion.
At the same time, a status report of the Sh4.4bn loan owed to Kenya Commercial Bank by Nairobi City County including the procedures followed in procuring the loan should be provided.
“The Budget committee should also explain why the county government is defaulting on its loans that have led to accumulation of penalties and interest which may make the county government lose its credit rating and hinder borrowing in future,” Sakaja added.
The committee was also put to task to explain how the county government will fund its budget if it implements the proposal to dedicate one of its source revenue (cess collection) to the repayment of the Kenya Commercial Bank loan, considering the underperformance of own source revenue collected over the years.
“Not a single asset belonging to Nairobi County should be sold or disposed by the county government. The Governor and NMS should appear before Senate and until then, not a single centimetre of land, machinery should be allowed to be sold to recover assets.”
This will not be the first time the county government has resorted to selling assets in order to forestall being auctioned.
In 2012, The Local Authorities Pension Fund (Lapfund) acquired Mariakani Estate as part of a debt swap agreed upon with the now defunct Nairobi City Council.
The estate was transferred in March 2013 to clear City Hall’s Sh2 billion debt.
Valued at Sh1.95 billion, based on a valuation done in 2013, the estate sits on a 10.13-acre land, located in Nairobi’s South B and has 30 blocks of eight flats.
It boasts 240 units where tenants pay about Sh10,000 per unit.
By end of 2021, the property was valued at Sh2.6 billion.
Edited by B. Oruta