Treasury wants taxpayer money to pay off 104 billion shillings parastatals

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Economy

Treasury waits for taxpayer money to pay off 104 billion shillings parastatals


National Treasury building. PHOTO FILE | NMG

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Summary

  • Kenya Power accounts for more than half of the unsecured debt, which the Treasury could potentially step in and repay.
  • The Treasury could also come to the aid of the Kenya Pipeline Company, which has a 19 billion shillings syndicated loan from Stanbic Bank, NCBA, StanChart, Co-operative Bank and Rand Merchant Bank. from South Africa.
  • Kenya Airports Authority debt stood at 11.82 billion shillings as of June 2020, including two facilities from the Development Bank of France – 6.77 billion shillings.

Taxpayers could in the future step in and bail out nine state-owned enterprises, including Kenya Power, with commercial loans totaling more than 104.84 billion shillings, the treasury revealed.

Loans, which companies have taken out after seeking approval from the Treasury, represent a potential financial burden on the taxpayer, as the funds have been invested in priority projects.

The credit was extended by commercial lenders on the basis of the “good financial position” of Crown corporations, which may have difficulty meeting repayments in the future.

“These public enterprises (public enterprises) borrow to finance strategic projects and high priority in the national development program”, indicates the Treasury in the annual report on the debt.

“Unsecured loans therefore present a risk of contingent liabilities and a potential budgetary commitment to the national government. “

Kenya Power accounts for more than half of the unsecured debt, which the Treasury could potentially step in and repay. The near-monopoly electricity distributor had 53.84 billion shillings in debt as of June 2020, the bulk of which came from Standard Chartered Bank at three facilities. StanChart loans amount to 27.72 billion shillings (guaranteed by the World Bank) to be repaid in five to 10 years to refinance the expensive loans from Kenya Power, to 7.59 billion shillings with a maturity of four years for refinancing and 800 million shillings with a similar term. to strengthen working capital.

The loss-making electric utility also owes the NCBA 6.75 billion shillings, which will fall due in more than 10 years, to Equity Bank (4.06 billion shillings which will mature in less than four years) and to the Rand Merchant Bank of South Africa (1.26 shillings). billion which will be due in less than four years).

The Treasury could also come to the aid of the Kenya Pipeline Company, which has a 19 billion shillings syndicated loan from Stanbic Bank, NCBA, StanChart, Co-operative Bank and Rand Merchant Bank of South Africa for the construction of a pipeline which will expire in less than four years.

Other companies that may expose taxpayers to financial liabilities include KenGen, which has a 13.62 billion shillings loan comprised of an NCBA loan (8.36 billion shillings for wellheads) , Co-op Bank (2.33 billion shillings for the drilling of 89 wells), HBSC of London (1.44 billion shillings for the purchase of platforms) and the Development Bank of France (801 million shillings of shillings).

Kenya Airports Authority debt stood at 11.82 billion shillings as of June 2020, including two facilities from the Development Bank of France – 6.77 billion shillings for upgrading airport facilities at a term of less than 10 years and 5.05 billion shillings which expire in more than 10 years.

Jomo Kenyatta University of Agriculture and Technology could potentially expose taxpayers to 2.74 billion shillings in debt at three KCB facilities for infrastructure development, while Kenyatta University’s debt was approximately 1.26 billion shillings from Equity (700 million shillings) and the Co-op Bank (564 million shillings)).

The University of Nairobi had a loan of 783 million shillings from Absa Bank. The others are East African Portland Cement (Sh 1.75 billion from KCB) and Postal Corporation of Kenya (Sh 20 million from NCBA).

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