Treasury urged to release Sh2.5bn and save Kisumu mall from auctioneers

Auditor-General Edward Ouko. PHOTO | FILE
Auditor-General Edward Ouko. PHOTO | FILE 

Auditor-General Edward Ouko has recommended that the Treasury release Sh2.5 billion to clear a bank loan and save the Sh4 billion Lake Basin Development Authority (LBDA) Mall from being auctioned.

In a report dated January 24, Mr Ouko recommends that the Treasury and the parent ministry should ensure that the Co-operative Bank loan and co-developer dues are paid in full as soon as possible.

“The Treasury should release budgetary allocations to LBDA to enable it meet its financial obligations, including pending bills to the contractor and the bank,” states the report.

Mr Ouko said that failure by the government to disburse Sh1 billion budgeted for in the 2015/16 financial year and another Sh1.5 billion budgeted for in the 2016/17 period made it difficult for the authority to meet its obligations, prompting the borrowing from banks.

“The construction of the Kisumu-Kakamega Road interchange should be speeded up to ensure access to the mall,” added Mr Ouko in the report.


On Monday, Stephen Mwanga, a director at the LBDA board, said the Public Works Department had valued the mall at Sh3.86 billion.

“They confirmed value for money and recommended a further construction of a tyre centre and a three-star hotel as additional components of the project,” Mr Mwanga said.

Mr Ouko’s report came in the wake of protests by Ugunja MP Opiyo Wandayi and his Nyando counterpart, Fred Outa, over threats to auction the mall due to the debt.

The MPs said the mall attracts Sh145 million daily in interest after the Devolution and Planning ministry failed to release money owed to the bank.
Parliament set aside Sh1.5 billion in the current budget to enable LBDA to clear part of the Sh2.5 billion debt.

The MPs claimed that the Devolution ministry had written to Attorney-General Githu Muigai seeking further advice on whether or not to pay the debt.

“Unfortunately, as the circus continues taxpayers are losing heavily since the project is accumulating interest at the staggering rate of Sh145 million per day,” said Mr Wandayi. The MPs said a multi-agency committee had been formed to give advice on the issue.