Senators calls for EACC probe as Bomet water company drowns in debt
Vihiga Senator Godfrey Osotsi, who heads the Senate County Public Investments and Special Funds Committee, during a session at the KICC In Nairobi on March 14, 2023.
What you need to know:
- The radical move is part of recommendations by the Senate County Public Investments and Special Funds Committee.
- The committee led by Vihiga Senator Godfrey Osotsi said the firm has serious management issues which have left it with a debt of Sh203 million.
Senators now want the anti-graft agency to investigate operations of the Bomet Water and Sanitation Company which is on the brink of insolvency due to financial malpractice.
The lawmakers called on the Ethics and Anti-Corruption Commission (EACC) to expedite the probe, which should target top former and current officials of the utility firm with a view to prosecuting those found culpable.
The radical move is part of recommendations by the Senate County Public Investments and Special Funds Committee.
The committee led by Vihiga Senator Godfrey Osotsi said the firm has serious management issues which have left it with a debt of Sh203 million.
The senators raised concerns over the financial stability of the company which is grappling with cash flow challenges that have seen staff not paid salaries for four months.
“We direct that the EACC institute investigations into operations of this company and if there are culpable persons they should be prosecuted,” said Senator Osotsi.
“We are concerned over the existence of the company because audit queries have been recurring for the last three financial years without any remedial actions being put in place.”
The committee also gave 60 days for the restructuring of the company’s human resources, and the provision of a list of all stalled water projects as well as measures to be taken to complete and operationalise them.
Appearing before the committee, Governor Hillary Barchok said the problems at the water firm are linked to cash flow challenges that have made it unable to raise enough revenue.
Mr Barchok admitted that the county government has had issues with the former managing director of the company and has instituted changes in governance and revenue collection to improve operations.
The county boss said they requested a special audit of the company, by the auditor-general, and that he will receive the report in the course of the month or early next month.
“We are trying to see how we can salvage the company but we are struggling,” said the governor.
According to Auditor-General Nancy Gathungu’s report for the financial year that ended June 2021, the firm made Sh104.7 million comprising Sh88.2 million in the income from water sales.
Interestingly, the company produced 4.4 million cubic meters of water, out of which only 1.3 million were billed to customers, resulting in unaccounted volume of 3 million cubic meters or 69.7 percent of the total water production.
This means the firm lost Sh89.6 million in non-revenue water, which was 44.7 percent above the allowable loss of 25 percent allowed by the Water Services Regulatory Board (Wasreb).
During the year under review, the firm had a debt stock of Sh203 million, out of which Sh175.7 million related to customers whose debts had remained uncollected for more than 120 days.
According to the damning report, the debts have continued to grow over time thereby raising doubts on their collectability.
Narok Senator Ledama ole Kina said the Sh203 million debt means the company is running in the red. He noted that no company can function in such a state hence the need to know if it is insolvent or not.
His Migori counterpart Eddy Oketch wanted to know how the firm intends to stabilise its cash flow in regards to the skyrocketing debts and bad debtors.
He asked, “Which debt collection strategy do you have in place to collect the Sh175 million?”
In response, Finance executive Wesley Sigei said they are looking at collecting Sh131 million in three months while also banking on the full rollout of smart metering to help net defaulters.
“Going forward, you will not get water if you are not connected through the smart meter,” he said.
Further, the company has not remitted statutory deductions totaling Sh38.4 million, with 30.8 million relating to deductions owed to Laptrust over a period of three years from March 2018.
It also owes Kenya Power Sh43.4 million as of June 2021, this amount having increased by Sh14.2 million from the previous financial year’s figure.
The auditor-general said no satisfactory explanation was provided to justify the circumstances that led to accumulation of such huge electricity bills.
The firm is also struggling with a bloated staff establishment, with 214 employees against a requirement of 195.
Governor Barchok said they are contemplating discontinuing supplying bulk water to the Kericho Water and Sanitation Company over Sh15.9 million debt.
He said they have tried to bring the water company to the negotiating table but they have not been honouring the requests, the latest one made on March 23.
“We have been carrying this burden for a long time. The only language they will understand is disconnecting [the supply of water]. I have no other option. I will not continue shouldering burdens which are not ours. We have gone beyond the limit.”
