- Senate County Public Investment and Special Funds Committee told Kericho Governor Dr Erick Mutai to promptly act to save the company from sinking.
- The Vihiga senator Godfrey Osotsi-led committee asked the county chief to reconstitute the board of the company and the entire workforce if the water utility firm is to make profits.
Image: EZEKIEL AMINGÁ
A Senate oversight committee has recommended an overhaul of Kericho Water and Sewerage Company after revelations the firm is insolvent.
Senate County Public Investment and Special Funds Committee told Kericho Governor Dr Erick Mutai to promptly act to save the company from sinking.
The Vihiga senator Godfrey Osotsi-led committee asked the county chief to reconstitute the board of the company and the entire workforce if the water utility firm is to make profits.
The directive comes after revelations that the company is in the red as it posted negative capital in three consecutive financial years.
Currently, the firm operates on a negative working capital of over Sh122 million.
“We direct that you furnish this committee with the measures the County Government has taken to deal with the issue of Bomet Water Services and the challenges within 60 days,” Osotsi said.
On Tuesday, the committee further directed that the Governor must work closely with the County Assembly to ensure that the water company gets a proper legal framework to guide the operations.
This after it emerged that their water firm has been operating without any legal backing.
“Under article 96, the Senate exists to protect Counties and all its investments. We therefore that this company be restructured in totality, including the human Resource, board of directors and any other restructuring that you deem fit in 60 days,” said Osotsi.
The committee made the recommendations following a damning audit report for the financial year 2020-2021.
In the report, Auditor General Nancy Gathungu stated that the statement of profit or loss and other comprehensive income reflects an operating loss of Sh10.14 million.
This resulted in an accumulated negative retained earnings balance of Sh117.22 million as of June 30, 2021.
The report further shows that the total current liabilities balance of Sh346.79 million exceeded the current assets balance of Sh224, 475,275 resulting in negative working capital of Sh122.31 million.
As a result, the Company is unable to meet its financial obligations as and when they fell due.
“The state of affairs is an indicator of an acute financial challenge facing the Company which raises significant doubt about its ability to continue to operate as a going concern without support from creditors and the County Government,” the report states.
"However, the material uncertainty in relation to going concerned and any mitigating measures put in place by the Company’s Directors to reverse the undesirable trend has not been disclosed in the financial statements,” reads part of the report.
But in their response, Kewasco MD Kibii Siele told the committee that during the takeover of Tililbei Water and Sanitation Company (TILWASCO) in 2018, KEWASCO took over the assets and liabilities.
The County Government of Kericho committed to clear all the outstanding liabilities by signing a subsidy support agreement to Tililbei to clear all the outstanding liabilities including monthly electricity, bulk water and salary harmonization costs.
“The support towards electricity payment and bulk water supply is being honoured partly but with often delayed, these delays have resulted in the disconnection of electricity and bulk water in several instances resulting in accrued liabilities in salaries and creditors,” said Mr Siele.
The MD stated that the county government has not honoured payment towards this component.
As at the date of the takeover, TILWASCO had a liability amount of Sh90,565,225 out of which Sh25,073,379 was to be paid by Bomet Water Company as a share of liabilities during the split of Bomet Water Company and Tililbei Water and Sanitation company.
“The balance of Sh65.49 million was a share of the liabilities to be paid by the County Government of Kericho as of the date of the takeover. The same has not been paid to date.”
Siele’s response provoked the Senators, saying that the management was either incompetent or had just failed to follow the law.
“You are running an insolvent company. I want to hear from the Managing Director about the basis for existence. With such a dying company, just get rid of the MD and the Board tomorrow,” said Kisumu Senator Prof Tom Ojienda.
Ojienda’s sentiments were echoed by Karungo Wa Thang’wa (Kiambu) saying that there was a lot of incompetence in the utility firm.
“There is a lot of incompetence in this water company. It is time we sit as a committee and do an overhaul. They take things so casually. We need to do something to turn around these water companies. The issues being raised here meet the threshold of removal of a governor,” said Thang’wa.
However, Governor Mutai told the committee that he was still studying the water utility firm before deciding whether to shut it down or to pump in more money but fire the Managing Director and the Board.
“Am still trying to study whether we need this company or not. It has been making losses throughout. We do not want to lie to each other. We are making plans on either to revive the company or we do something else,” said Mutai.
William Kisang’ (Elgeyo Marakwet) told the Kericho County boss that there was no need to run a company that was not making any profit, citing that he can second the County executive to help run the company.
“It is just prudent to reduce the expenses the company is incurring. Governor, you can second qualified personnel who are already on the payroll from the County to help run the company as you figure out what to do,” charged Kisang’.