Gath**gu says Sh219b loans stifling 17 State corporations
A total of 17 parastatals have non-performing or dormant loans amounting to Sh218.8 billion out of Sh921.9 billion held by ministries and government agencies as of June last year, a new report by the Auditor-General shows.
The loans, the report says, fell due for redemption on various dates over the years but were not paid.
“As was reported during the 2019/2020 financial year, the total outstanding loans balance of Sh921,930,325, 958 reflected in the financial statements for the year ended 30 June 2021 includes loans amounting to Sh218, 811, 487, 711,” reads the report.
During the year under review, the affected institutions did not make any repayment against their respective due loan balances, it says.
States the report: “It is noted that some of the loaned entities continue to perform dismally and require government bailouts. Non-repayment of the loans has led to the continued write–offs of the loans as bad debts.”
Consequently, Auditor General Nancy Gathungu’s report shows that the total outstanding obligations guaranteed by the Kenya government stands at Sh157.2 billion.
Gathungu in the report fingered the parent ministries for the agencies for failing to prepare and submit for audit their respective statements of outstanding obligations guaranteed by the government which is contrary to section 81(1) and 81 (2) (c) of the Public Finance Management Act 2012.
Outstanding obligations
She said that only the National Treasury prepared and submitted for audit statements of the outstanding obligations guaranteed by the government, which reflected an outstanding balance of Sh152.3 million being capital and interest owed by Cereals and Sugar Finance Company, a corporation empowered to finance transactions entered into by the government.
Gathungu says lack of preparation of respective statements is not only a breach of the Public Finance Management (PFM) act 2012 but also an indicator that the total Government Guaranteed debt could not be confirmed.
Among the outstanding obligations guaranteed by the government include Kenya Airways Sh80.963 billion, Kenya Ports Authority (KPA) Sh37.9 billion, Kenya Electricity Generating Company Plc Sh 26.6 million and Kenya Power and Lighting Company Sh 11.8billion.
“The consolidated National Government investment Report for the year 2020/2021 prepared by the National Treasury in accordance with section 89 of the Public Finance Management Act 2012, indicates that the total outstanding government guaranteed debt amounted to Sh157, 200, 000,000 as at 30 June 2021,” reads the report
A summary report for the national government Ministries, Departments for the financial year 2020/2021 shows that the Sh921.9 million represents an increase of Sh54.9 million or 6 per cent of the total outstanding loan balance of Sh867 million reported as at June 30 2020.
“It was noted that institutions continued to receive additional funding even when they are underperforming, thereby casting doubt on the criteria used to determine the advancement of additional loans,” reads the report,
The 17 entities include Kenya Railways Corporation (KRC) Sh179 million, Kenyatta University Sh10.9 million, Tanathi Water Services Board Sh9.7 million, Tana Water Services Board Sh7.5 billion and Mumias Sugar Company with Sh 3billion are all facing financial challenges.
