Companies

MPs set to grill 17 parastatal chiefs over Sh83bn loans

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Treasury Principal Secretary Julius Muia. FILE PHOTO | NMG

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Summary

  • Parliament has summoned the top management of 17 state corporations that have failed to repay loans worth Sh84.3 billion guaranteed by the Treasury.
  • The National Assembly’s Public Accounts Committee (PAC) said it will grill top managers of the parastatals which have continued to rely on the Treasury for bailouts.
  • The committee is seeking to establish why cash-strapped parastatals continue to sink into more debt despite the Treasury pumping in billions of shillings in bailout.

Parliament has summoned the top management of 17 state corporations that have failed to repay loans worth Sh84.3 billion guaranteed by the Treasury.

The National Assembly’s Public Accounts Committee (PAC) said it will grill top managers of the parastatals which have continued to rely on the Treasury for bailouts.

The committee is seeking to establish why cash-strapped parastatals continue to sink into more debt despite the Treasury pumping in billions of shillings in bailout.

PAC took Treasury Principal Secretary Julius Muia to task to explain why the huge debts should be written off at taxpayers’ expense.

“Have they come to you to say they cannot service their loans? Under what circumstances can you write off a debt? Something is amiss here.

“We will call them to explain what they are doing with the public money y...,” Mr Wandayi said.

State corporations that are targeted include the cash-strapped Kenya Airways (KQ) that owes the government Sh24.22 billion, Mumias Sugar Company (Sh3 billion) and National Irrigation Board (NIB) Sh2.3 billion.

Others are Lake Victoria South Water Services Board (Sh13.12 billion), Coast Water Service Board (Sh12.24 billion), Tanathi Water Services Board (Sh9.71 billion) and Lake Victoria North Water Services Board (Sh7.59 billion).

The committee chaired by Ugunja MP Opiyo Wandayi also wants to grill the management of Tana Water Services Board which has failed to settle Sh7.54 billion loan, National Water Conservation and Pipeline Corporation (Sh2.46 billion), Kenya Meat Commission (Sh940.24 million), Agricultural Finance Corporation (Sh475.12 million) and Water Resource Management (Sh362.61 million).

Dr Muia appeared before the committee to respond to question raised by Auditor-General Nancy Gathungu on dormant loans.

The auditor had raised the red flag over dormant loans that represent 10 percent of the total loan portfolio of Sh809.99 billion owed to the national government by about 260 State corporations as at June 30, 2019.

“The loans had no movement and as previously reported, have remained unpaid over a significant period of time casting doubts on their recoverability,” Mr Gathungu said.