Photo/Daily Nation Auditor-General (AG) Edward Ouko. AG’s report shows that the government risks losing more than Shilling 823.7 billion worth of outstanding loans advanced to 72 State corporations.
The government risks losing more than Shilling 823.7 billion worth of outstanding loans advanced to 72 State corporations, most of which are facing financial challenges. About Sh47.52 billion of these loans are non-performing or simply dormant, and have fallen due on various dates over the years.
A report by Auditor-General Edward Ouko on government investment and public enterprises (outstanding loans)- National Treasury for the year ended June 30, 2018, shows that most of the loans were advanced by the National Treasury without fundamental documents, and questions the loaning criteria.
REDEEM LOANS
“Failure to redeem the loans precipitate a high likelihood of defaulting and eventual loss of public funds because of continued write-offs of bad debts,” Mr Ouko says in the report. The report currently before the National Assembly shows that the management of the state corporations could not provide the annual work plans, cashbooks, ledgers, quarterly reports and monitoring and evaluation reports for the loans.
There were also no documentation for determining the beneficiaries, terms of the loans and the authorisation of the disbursements. “This determination appears to be outside the department’s control, thus the department implements decisions that are made elsewhere. This is exhibited by the continued growth of the outstanding loans,” the report says.
The report will be reviewed by the National Assembly’s Public Accounts Committee (PAC) chaired by Ugunja MP Opiyo Wandayi, which will make recommendations to the House.
NEW LOANS
Mr Ouko further noted that the defaulting institutions continue to receive funding, casting doubts on the criteria used to advance of new loans. Without budgets, annual plans, assessment or evaluation and performance reports of the loaning portfolios, it was difficult to determine whether public funds had been used properly.
Among the 20 parastatals with dormant loans in billions of shillings are the Rural Electrification Authority (Sh13.65), the Coast Water Service Board (Sh7), Northern Water Services Board (Sh5.39) and Tanathi Water Services Board (Sh4.4). Others are Lake Victoria South Water Services Board (Sh3), Lake Victoria North Water Services Board (Sh2.8) Mumias Sugar Company (Sh2.5) the National Water Conservation and Pipeline Corporation (Sh2.46).
South Nyanza Sugar Company limited shows in its books to have a loan of Sh770.28 million but Treasury has Sh199.02 million, Mumias Sugar Company limited has Sh3 billion as per its records but Treasury records have Sh2.5 billion.
SH15.05 BILLION
Agro Chemicals has Sh9.07 billion but only Sh1.11 billion is captured at the Treasury records, Tanathi Water Services Board Sh5.20 billion but Treasury records have Sh15.05 billion. Moi University has Shilling 257.77 million but Treasury lists Shilling 31.25 million, Kenya Meat Commission Sh300 million but Treasury has Sh940.24 million in its records.
Kenya Utalii College Sh140.13 million but Treasury lists zero balance, Faulu Kenya Shilling 176.68 million but Treasury has Shilling 141.31 million, IDB Capital limited claims to have zero balance but Treasury claims IDB is yet to pay Sh1.56 billion.
Source: Daily Nation