Economy

Water agency cites law change for unpaid decades old Sh2.5bn loan

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MPs during a session at Parliament chambers. PHOTO | FILE

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Summary

  • The National Water Harvesting and Storage Authority says it has no money to repay a Sh2.46 billion loan which has remained unserviced for nearly 30 years.
  • Mr Sharon Obonyo, the chief executive officer told MPs that the authority took the loan in 1992 for improvement and rehabilitation of three water projects.
  • She said the proceeds obtained from water sales were to be partly used in defraying the loans but amendments to the Water Act in 2004 changed the situation.

The National Water Harvesting and Storage Authority says it has no money to repay a Sh2.46 billion loan which has remained unserviced for nearly 30 years.

Mr Sharon Obonyo, the chief executive officer told MPs that the authority took the loan in 1992 for improvement and rehabilitation of three water projects.

She said the proceeds obtained from water sales were to be partly used in defraying the loans but amendments to the Water Act in 2004 changed the situation.

“We have no mandate as the changes to the law in 2004 ensued that the repayments were moved to respective water bodies. We do not have power to collect water levies as we speak,” Ms Obonyo told MPs.

She said the loans were dully disbursed to the authority through the National Treasury and the Ministry of Water and Sanitation.

“The authority utilised the loans for the due purposes and completed improvement and rehabilitation of the above water projects,” Ms Obonyo told the National Assembly’s Public Accounts Committee.

The loan agreements were for the Second Mombasa and Coastal Water Supplies and Rehabilitation Project, Sabari Wellfield Rehabilitation Project and Improvement of the Operational Conditions of Drinking Water Transmission and Distribution System.

She said the National Treasury continues to claim from the authority the servicing of the loans despite the fact that the authority no longer operates the water supplies developed by the funds.

“The authority has written to the Ministry of Water and Sanitation seeking for their intervention in both the signing of the transfer agreements and assistance on repayment of the loan due before handing over to the Water Services Board (currently Water Works Development Agency WWDAS),” Ms Obonyo said.

She said the PS has since directed the authority to hand over the loan portfolio to the relevant water service board as per the transfer.