Ouko: Cash-strapped parastatals can’t pay Sh823 billion in loans

Mercy Mwai

The taxpayer risks losing Sh823.6 billion that the government advanced to 72 financially-struggling parastatals in the year ending June 2018.

Auditor General Edward Ouko, in his recent report on government investment and public enterprises (outstanding loans) for the said year, regretted that the loans were given to public entities without fundamental documentation.

According to Ouko of the loans, Sh47.52 billion are non-performing or simply dormant and have fallen due for redemption at various dates over the years.

Among 20 parastatals with dormant loans include Rural Electrification Authority (Sh13.65 billion), Coast Water Service Board (Sh7 billion), Northern Water Services Board (Sh5.39 billion) and Tanathi Water Services Board (Sh4.4 billion).

Others are Lake Victoria South Water Services Board (Sh3 billion), Lake Victoria North Water Services Board (Sh2.8 billion), Mumias Sugar Company (Sh2.5 billion), National Water Conservation and Pipeline Corporation (Sh2.46 billion), National Irrigation Board (Sh2.26 billion) and Tana Water Services Board (Sh1.8 billion).

“It was noted that failing institutions continue to receive additional funding even when they are underperforming thereby casting doubt on the criteria used to determine the advance of new loans,” it adds.

Outstanding loan

In the report tabled in the National Assembly last week, Ouko regretted the State corporations could not provide the annual work plans, cashbooks, ledger, trial, quarterly reports and monitoring and evaluation reports for the loans issued during the year.

He also regretted that documents for the determination of the beneficiaries, terms of the loans and the authorisation of disbursement were not provided for.

“This determination appears to be outside the department control thus the department implement decisions that are made elsewhere. This is exhibited by the continued growth of the outstanding loan,” the report says. 

Of Sh823.6 billion loans disbursed, new loans issued in the 2017/18 financial years amounted to Sh55.9 billion yet only loans worth Sh2.8 billion were repaid while loans amounting to Sh3 billion were written off.

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