The Agriculture and National Treasury Cabinet Secretaries are set to meet with the management of KCB to work out a payment plan for the Sh7 billion debt that the National Cereals and Produce Board (NCPB) owes the bank.
The debt comprises Sh3 billion in interest on top of a principal amount of Sh4 billion that NCPB borrowed from the bank in 2016/2017 financial year, but failed to repay.
NCPB chairman Mutea Iringo said the meeting is scheduled for this week and will resolve the standoff that has seen NCPB unable to borrow more money.
“The CS Agriculture is organising for a meeting between the ministry, Treasury, NCPB and KCB to resolve the Sh7billion loan,” said Mr Iringo.
NCPB borrowed the money to purchase fertiliser to be sold to farmers under a subsidy programme.
It bought a bag of fertiliser at Sh3,400 and sold the same at between Sh1,500 and Sh1,800, with the government supposed to cater for the difference.
However, the government failed to pay the subsidy difference leaving the debt to accumulate.
Mr Iringo also said that NCPB is still grappling with unpaid debts, including from the government, which are weighing down its operations especially at this time when it has embarked on commercial grain buying activities.
“Debts owed by private individuals have been reduced through outsourcing of debt collectors. We have also tasked our depot managers through performance contracts to ensure debt is collected,” he added.
As at the end of last year, the NCPB was owed Sh18.1 billion by government agencies, due for years of grain handling services.
The board has stopped purchasing maize after exhausting Sh2.1 billion that the government had paid as part of the debt.
It now wants the government to release at least Sh4 billion in debt repayment to facilitate a resumption of the maize purchase, in which it is targeting one million bags but has only bought 375,000 so far.