•Kenya Power is on the spot for failing to pay Sh517 million to suppliers and contractors who executed the Last Mile Connectivity Project.
•The Western Bypass has a pending bill of Sh3.9 billion while Sh3.6 billion was yet to be paid in respect of the Southern Bypass project.
Image: GEORGE MURAGE
Road projects account for the lion's share of unpaid billions arising from donor-funded projects, a new audit report shows.
The report reveals that road agencies’ debts account for more than 75 per cent of the Sh35 billion bills that remain unpaid.
President Uhuru Kenyatta has repeatedly asked government agencies to clear pending bills.
Kenya National Highways Authority has the highest pending bill at over Sh27 billion.
The huge bills were reported in respect of energy, rural electrification, geothermal and water projects.
Auditor General Nancy Gathungu said non-payment of pending bills is a breach of the law.
Section 74(4) of the Public Finance Management Act, 2012 says an accounting officer breaks the law if he/she fails to pay verified pending bills promptly, more so in circumstances where funds are provided for in the budget.
“The failure to settle bills in the year to which they relate is mainly attributed to inadequate budgets as a result of starting new projects or activities before completion of projects and activities started earlier,” Gathungu said in her review for the year to June 2021.
The auditor wants the concerned agencies called out for failing to pay pending bills as a first charge of the budget for a financial year.
Gathungu said it was time the government took action to ensure pending bills are paid on time as per the law as failure to settle the bills “has an effect of withholding circulation of cash in the economy.”
She said unpaid bills affect the smooth operations of suppliers and Micro, Small and Medium Enterprises and affect revenue collection due to Value Added Tax and Withholding Tax.
“All these factors call for the Executive to put in place strict measures to minimise the occurrence of pending bills,” Gathungu said.
At Ketraco, the audit has revealed that the electricity generator is yet to settle bills to the tune of Sh2.9 billion in projects involving the construction of high voltage power transmission lines.
The Ketraco projects include the Olkaria-Lessos-Kisumu line (Sh919 million), 220KV and 132KV Transmission Lines and Substations (Sh543 million), and Power Transmission System Improvement Project (Sh469 million).
Rural Electrification and Renewable Energy Corporation failed to pay Sh795 million for a project to connect five regions to the mains electricity grid.
Sh461 million remained pending in respect of the Menengai Geothermal Project and Sh184 million for the Bogoria Silali projects, putting the Geothermal Development Company on the spot.
Kenya Power is on the spot for failing to pay Sh517 million to suppliers and contractors who executed the Last Mile Connectivity Project.
Kenha, the audit reveals, owed a contractor at the Mombasa Port Area Road Development Project Sh4.7 billion and another Sh4.5 billion in respect of the urban transport improvement project.
The Western Bypass has a pending bill of Sh3.9 billion while Sh3.6 billion was yet to be paid in respect of the Southern Bypass project.
Some Sh2.3 billion remained pending in regards to contracts for the road linking Tanzania, Kenya, and South Sudan–popularly known as the Northern Corridor.
The highways agency owed the Kibwezi-Mutomo-Kitui road contractor Sh1.9 billion while Sh1.5 billion was yet to be settled in the dualling of Magongo Road.
The Transport department is yet to settle bills to the tune of Sh1.5 billion on social facilitation projects while Sh700 million for Kimira irrigation project remained unpaid by the Regional Development Department.
Kenya Urban Roads Authority is yet to pay Sh490 million for the Nairobi Missing Links Road project with roads including Thika Superhighway continuing to accumulate bills in maintenance costs.
Gathungu said some agencies fail to factor in the closing balance of pending bills in a previous year during the formulation of the budget for the subsequent year.
This means that the subsequent year’s budget is unlikely to be sufficient to settle unpaid commitments relating to operations of the previous year and at the same time fund the programmes for the current year.
Gathungu said the cases showed that accounting officers were committing funds which are not available, even as the bills continue to pile pressure on resources and attract penalties.
The auditor decried that pending bills subject suppliers of goods and services to public entities to face unwarranted financial charges from their financiers.
Several vendors supply goods and services on credit to the government without proper arrangements or agreements with the state entities.
Edited by Kiilu Damaris