Puzzle of missing Sh2.2 billion in SGR accounts
The Auditor-General has raised the red flag over Sh2.2 billion discrepancy between Kenya Ports Authority (KPA) and Kenya Railways Corporation (KRC) accounts relating to amounts generated from the standard gauge railway (SGR) operations.
Kenya Railways says it has received Sh12.08 billion as SGR freight revenue from KPA, even though records by the port indicate it remitted Sh14.3 billion.
“Records maintained at KPA reveal that the reported SGR freight paid to the corporation amounted to Sh14,308,854,700, thus resulting in an unreconciled variance of Sh2,227,111,105,” the report by the Auditor-General says.
“The completeness and accuracy of SGR revenue of Sh12,081,743,595 from KPA could not be confirmed.”
It is not the first time the Auditor-General is raising the flag on discrepancies between KRC and KPA reports on SGR freight revenue.
The reports have picked variances between the two entities over the last three years.
In the 2019/20 financial year, for instance, the Auditor-General queried a Sh3.1 billion variation in the SGR collections, adding to complaints from the 2018/19 fiscal year when she questioned another difference of Sh492 million.
In the report tabled in Parliament on Wednesday, Ms Nancy Gathungu questions figures KRC reported on passenger revenue, indicating that more than 90 per cent was unsupported.
“Kenya Railways reported earning Sh1.369 billion from passenger operations in the 2020/21 financial year, out of which...Sh1,321,041380 was not supported with the system or manually generated SGR daily passenger records and extracts or passenger manifests,” the report says.
As such, the Auditor-General observed, it was not possible to confirm the amount posted from passenger operations.
Kenya Railways generated Sh17.49 billion from its core activities, with SGR operations accounting for Sh13.57 billion.
The questions on SGR operations and financial management come when the rate of depreciation of Kenya’s single-largest infrastructural project continues to rise, shrinking the chances of it ever breaking even.
Financiers have continued slapping taxpayers with penalties, as Kenya Railways defaults on its loans.
In 2020/21 fiscal year, SGR assets depreciated by Sh19.69 billion, a 33 per cent growth from a depreciation of Sh14.8 billion in the 2019/20 year.
Kenya Railways books indicate that the SGR track is the asset losing value at the highest rate, having depreciated by Sh5.3 billion in the 2020/21 fiscal year alone.
Further, interest on the SGR on-lent loan of Sh569 billion by the end of June 2021 grew by more than 220 per cent between 2020 and 2021, to Sh17.53 billion.
The government defaulted on repayment of the loan from the Exim Bank of China in the 2020/21 financial year.
“The management did not make repayments during the year under review towards this loan. The payables and accrued charges reflect a balance of Sh50,920,344,125, which includes a default penalty payable balance of Sh644,343,297,” the report says.
“Loan records reveal that the corporation incurred the penalties and interests on the on-lent loan due to non-settlement of the maturing obligations as and when they fall due.”
The lenders did not slap Kenya with the penalty in 2019/20 fiscal year, and the Auditor-General notes that KRC continues to be exposed financially due to the non-settlement of the loan