NIB, Treasury tussle over Sh2.6bn unpaid loan

The National Irrigation Board and the National Treasury are embroiled in a tussle over a Sh2.6 billion loan extended to the agency.

NIB officials’ maintain that the money was given to the entity as a grant and that they have no means of repaying it.

The loan was the subject of a query on the NIB financial statements after it was not declared in the entity’s reports.

The National Treasury had in its financial year ending June 2013, reprimanded the NIB for not meeting its financial obligation.

Documents tabled before the National Assembly’s Public Investments Committee chaired by Mvita MP Abdulswamad Sharrif showed that the government has been seeking payment for the loan.

An April 11, 2018 letter signed by former Treasury PS Esther Koimett sought that NIB confirms the loan balances queried by the office of the Auditor General. 

She directed the board to furnish the Treasury with a breakdown of the outstanding total amount and the analysis of how it was disbursed.

But in an April 18, 2018 letter, NIB replied saying they only got Sh1.2 billion from the World Bank’s International Development Agency (IDA) as an on-lent loan in December 2007.

At that time, the principal loan was valued at Sh577 million but has since accrued interests.

The letter signed by NIB boss Gitonga Mugambi said that the loan was to be denominated, disbursed, and repaid in Kenya Shillings, hence the foreign exchange risk was to be borne by the National Treasury.

NIB further holds that the exchange rate as at the time the loan was advanced should be applied in calculating the interest earned over the facility.

He replied to Koimett saying that there would be no difference if the National Treasury proceeded to pay the loan.

Mugambi said funds allocated to the board are tied to specific projects hence cannot be diverted towards repayment of the loan which is due by 2020.

The CEO reiterated to MPs that the board is not in a position to repay the facility and will instead seek funding from the National Treasury.

He said there was no avenue of charging the communities where the projects were implemented as the monies were spent on development projects.

 “The money was disbursed for onward development for Kenyans. We only receive our funding from the government. If we are to pay for this, the government has to give us money to pay them back,” Mugambi said.

However, Shinyalu MP Justus Kizito said since there was no document showing the facility was a grant, it would not be possible for the irrigation board to change the terms.

“The auditor has been informed of the loan and that is why it remains an audit query. In order for you to say this is a grant and not a loan, there must be a letter to that effect,” the lawmaker said.

Nassir said, “We need to put it clear to ascertain that this is a grant or a loan. But note that you have committed to the government that this is a loan.

“The right way to go about this is to through your mother ministry to get Treasury to offset this and treat it as a grant. If you say it is not a wish.  Put it in writing.”

(edited by O. Owino)