• Last month, the government secured a Sh20 billion to help KQ repay another loan it borrowed from African Export-Import Bank (Afrexim) two years ago.
• The amount accounts for 89 per cent of Sh27.2 billion loans written off in favour of various state corporations, government agencies, and other organizations as at June 2018.
The government has written off Sh24.2 billion it lent to Kenya Airways, bringing to focus the viability of taxpayers’ money sunk in the troubled airline.
The amount accounts for 89 per cent of Sh27.2 billion loans written off in favour of various state corporations, government agencies, and other organizations as at June 2018.
A dossier by Treasury Secretary Henry Rotich, submitted to Parliament on Tuesday, says the Cabinet approved the write-off through CAB MEMO Ref: (17) 65 of May 29, 2018.
Last month, the government secured a Sh20 billion to help KQ repay another loan it borrowed from African Export-Import Bank (Afrexim) two years ago, the Business Daily reported.
The Budget Summary for 2019/20 financial year further reveals that the state is equally grappling with recovery of Sh116.8 billion non-performing loans.
For KQ, the write-off will be a reprieve, especially in the wake of it reporting a loss of Sh7.5 billion for the year ending December 2018 amid a Sh200 billion debt snare.
The company’s revenue hit Sh114.1 billion in the said period. KQ chairman Michael Joseph, in a statement on the financial results, said the airline’s operational costs hit Sh114.8 billion during the year under review.
Kenya Airways is seeking to take over the management of Jomo Kenyatta International Airport (JKIA) in a 30- year concession, with the hope of turning around its fortunes.
The idea sparked storm, prompting a Parliamentary probe amid concerns KQ is a loss-making entity, hence, not suited to take over JKIA which is currently run by Kenya Airports Authority.
Members of the National Assembly’s Transport Committee are currently working on a report on its inquiry into the Privately Initiated Investment Proposal (PIIP) which was approved by the Cabinet.
Apart from KQ, the Coffee Board of Kenya also gained a great deal in the debts write-off having been relieved of Sh976 million followed by Pyrethrum Board of Kenya (Sh863 million), and Kenya Industrial Estates (Sh758 million).
Treasury has also written off debts owed by Meru Central Farmers Cooperative Union (Sh188.9 million), Kenya Cooperative Creameries (Sh52.6 million), Uplands Bacon Factory (Sh26.2 million), Cotton Board (Sh23.6 million), and Sugar Belt Cooperative Union (Sh22.4 million).
The outstanding loans by government to state corporations stood at Sh799 billion as at June 30, 2018, being advancements over a long period of time.
Of these, Sh682.9 are active and are being serviced by the respective loanees, the 2019/20 Budget Summary states in part.
The ailing Mumias Sugar is among organizations with active loans (Sh2.5 billion), being part of the Sh3.5 bailout cash it was advanced by the government.
The Rural Electrification Authority was also advanced Sh13.6 billion while Kenyatta University is yet to repay Sh10.9 billion it was loaned by the state.
Kenya Railways has the lion share at Sh473 billion whereas Lake Basin Development Authority is yet to repay Sh2 billion it was advanced for expansion projects.
Kenya Power, KenGen, and Kenya Airports Authority are among entities with outstanding active loans.
Water boards have led in the share of entities with non-performing loans with Lake Victoria South and North board accounting for over Sh20 billion.
Their counterparts Athi and Coast owe the government Sh39 billion and Sh12.2 billion respectively while Northern and Rift Valley are not servicing their Sh5.3 billion and Sh4.8 billion loans.
Tana and Tanathi Water boards also owe the state Sh7.5 billion and Sh9.7 billion respectively with National Water Conservation and Pipeline Corporation failing to service its Sh2.5 billion loan.
The National Irrigation Board was also advanced Sh2.3 billion which it is yet to repay, begging the question on whether taxpayers got value for money on the loans.