Taxpayers lost Sh75 million in the 2016/2017 financial year arising from the under-utilisation of leased land at Galana Kulalu food security project, the Auditor- General has said.
In a report tabled in Parliament, Auditor- General Edward Ouko asked why the National Irrigation Board (NIB) leased 20,000 acres for the project yet only 10,000 acres is currently being used.
“It has not been possible to establish why the board leased 20,000 acres and only utilised 10,000 acres but making lease payments for 20,000 acres resulting to an apparent loss of Sh75 million as at June 2017,” reads Mr Ouko’s report.
He says the remaining 10,000 acres is idle and will remain idle since it was not included in the model farm programme.
“Management did not explain why they leased 20,000 acres of land when they required only 10,000 acres,” reads the auditors’ report.
Mr Ouko also warned that Kenyans risk paying more in the ShSh7 billion loan from the Bank Leumi of Israel to fund the project.
The report states that most of the loan terms are not in the be best interest of the Kenyan taxpayers pointing out that the interests will be determined from time to time by the bank depending on the economic conditions.
The report also says borrower will pay additional costs the bank will incur while mobilising the funds for loan disbursement. “The National Irrigation Board confirms the bank’s books and account entries in relation to this loan to be correct and binding to the board.
The board will not be entitled to contest any payment made by the bank and may not justify its failure to fulfill its payment obligation in accordance with the terms and conditions of the agreement. Therefore the conditions are in favor of the bank and not the board.