Nakuru County owes suppliers Sh2.71 billion
MCA Joel Karuri Maina of Biashara Ward, Naivasha and chairperson of Budget and Appropriation Committee speaks at the Nakuru County Assembly on March 22, 2022.
As Nakuru Governor Lee Kinyanjui’s first term comes to an end, his administration’s pending bills stand at Sh2.71 billion ahead of the August 9 polls.
The pending bills have remained unpaid despite the annual debt resolution appropriations. In the current financial year, Nakuru County Assembly set aside Sh200 million to clear part of the pending bills.
In the 2021/2022 financial year, the assembly approved Sh163 million for settling outstanding debts out of which Sh108 million was to clear the tax arrears owed to the Kenya Revenue Authority.
According to the report on the medium-term and debt management strategy paper, 2022 tabled at the county assembly by the Budget Committee and Appropriation chairperson Joel Karuri Maina, the debt is classified into two categories.
Transitional Authority
The first debt is inherited from the defunct local authorities as compiled by the Transitional Authority and amounts to Sh865.9 million.
The debts from defunct authorities namely the Municipal Council of Nakuru, County Council of Nakuru, Municipal Council of Naivasha and Town Council of Molo include statutory deductions.
The suppliers and contractors, water bills owed to Nakuru Water and Sanitation Company (Nawasco) and legal fees amounting to Sh304 million for services rendered to the four defunct local authorities are also pending.
The debts incurred by the devolved unit since the inauguration is Sh1.84 billion up from Sh1.7 billion representing an increase of Sh47.5 million.
Pending bill
The devolved unit has cleared Sh1.3 billion during the period under review but has a pending bill of Sh450 million recurrent and Sh337 million development-pending bills are another debt burden to the county.
The committee noted with concern that it has persistently requested that a forensic audit on pending bills be done to ascertain the authenticity but the county National Treasury has ignored the request.
"Given the current net debt level of Sh2.71 billion, it is essential to ensure that the county government exercises prudent debt management practice and efficiency in expenditure management to avoid unnecessary debt accumulation," read the report.
The committee has recommended a raft of actions to be taken to reduce the mounting debt and include a proposal to have the Auditor-General undertake a forensic audit to ensure that all debts, pending bills and other liabilities are undertaken to ascertain the accuracy and credibility of the amount to be paid.
Forensic audit
In future, the committee recommends that any appropriation for the debt resolution will be approved after the assembly peruses the report of the forensic audit.
The committee further recommended that the devolved unit invite former Clerks and treasuries of the defunct authorities to shed light on the nature, purpose and status of the inherited debts to ensure the debts are fully authenticated.
Other recommendations include pushing for a waiver of interest and penalties to settle statutory creditors, prudence use of the resources and strengthening fiscal discipline and stepping up revenue collection.
"Some pending bills emanate from shortfalls in local revenue collections that have a significant bearing on the budget framework," read part of the report.
