KBC, Tarda, City Hall bailout costs taxpayers Sh1bn

What you need to know:

Controller of Budget Agnes Odhiambo now wants the Treasury to recover all the money it has paid out on behalf of the agencies whose loans it guaranteed, but are not bankrupt.

The Treasury used Sh1.014 billion to bail out two underperforming parastatals and the Nairobi County government in the year to June.

The Controller of Budget’s latest report says the government serviced debts that the Kenya Broadcasting Corporation (KBC), the Tana and Athi River Development Authority (Tarda) and the defunct City Council of Nairobi (CCN) owed various agencies and global financial institutions.

The Treasury paid the debtors of the three institutions in the three months to September. Controller of Budget Agnes Odhiambo now wants the Treasury to recover all the money it has paid out on behalf of the agencies whose loans it guaranteed, but are not bankrupt.

The three institutions have since 1989 consumed Sh13 billion of taxpayers’ money through bailouts and Sh4.4 billion is still owed their lenders.

The State broadcaster has been unable to repay a Japanese debt that the government guaranteed. This has seen taxpayers remit Sh663.5 million to meet the public broadcaster’s repayment obligations.

READ: City Hall, KBC asked to refund Treasury Sh10bn

KBC says the money was borrowed on the strength of cashflows expected from the sale of television permits — then pegged at Sh1,000 per set. But the permit fees for radio and TV sets were outlawed following the liberalisation of broadcasting in 1997.

The Treasury also stepped in to repay a loan that the defunct CCN borrowed from USAid to build Umoja Estate more than three decades ago.

The 30-year loan was to be repaid by 2014 but City Hall defaulted, leaving the Treasury to pay the residual amount plus interest.

The Controller of Budget’s report shows the State paid Sh78.7 million in the year to June. City Hall borrowed $17 million (currently valued at Sh1.75 billion) from USAid in 1985

All the CCN liabilities and assets were transferred to the Nairobi County government. The State also stepped in to aid Tarda which has failed to repay money borrowed from the Japanese government . The State intervention cost taxpayers Sh272.7 million.