Nairobi City Water and Sewerage Company (NCWSC) has received the green light from the Nairobi county government to tap a Sh2.17 billion long-term commercial loan to settle an outstanding pension debt and avoid growing penalties.
The NCWSC, a wholly-owned subsidiary of the Nairobi County government, owes the cash to the Local Authority Pension Trust (Laptrust).
Currently, the outstanding amount comprises Sh981.19 million accrued interest, Sh937.91 million actuarial deficit, and Sh317.53 million unremitted contributions all owed to Laptrust.
Nairobi City County Executive Committee Member for Finance and Economic Planning, Charles Kerich said the county has no objection to the request by the water firm to tap a loan from a commercial bank.
The management of NCWSC had initially written to Attorney General Justin Muturi seeking his legal opinion on the matter but Mr Muturi advised them to seek the approval to borrow a loan from Nairobi County.
“We confirm that the county government has no objections to the efforts of the company to seeking the aid financing. The debt to be used towards the settlement of the outstanding pension arrears with Local Authority Pension Trust (Laptrust),” Mr Kerich said in a letter to NCWSC managing director Nahashon Muguna.
The pension debt split between Sh1.06 billion accrued in the pre-devolution era and Sh1.15 billion that had accumulated between April 2013 and December 2021 has grown over the years due to unpaid contributions, accrued interest, and actuarial deficit.
The debt arose after staff who were working in the defunct water and sewerage department of the Nairobi City Council were absorbed by NCWSC.
After their absorption, members of staff continued making contributions to Laptrust at the rate of 12 percent to 15 percent of pensionable pay for employees and employer, respectively.
