How State officials defied President Ruto in payment of Sh1.2bn to a Spanish Company
National Treasury Cabinet Secretary Njuguna Ndung’u when he appeared before members of the Finance and National Planning Committee at County Hall in Nairobi on Wednesday, November 8. He said the country is facing short-term liquidity constraints due to the maturing debt.
What you need to know:
- President William Ruto had pledged to settle the pending bill during a State visit by his Spanish counterpart Pedro Sanchez last year.
- The Spanish company, TYPSA had been contracted for consultancy services for the feasibility study and detailed design on Lower Ewaso Ng’iro South River Multi-Purpose Dam.
The Kenyan Government is on the spot for failure to settle over Sh1.2 billion owed to a Spanish company for consultancy services, a move that is threatening the pair’s bilateral ties.
President William Ruto had pledged to settle the pending bill during a State visit by his Spanish counterpart Pedro Sanchez last year, but the Treasury is yet to release the funds.
According to correspondence by senior government officials on the matter in possession of Nation, Kenya acknowledged the debt, but officials are yet to honour President Ruto’s directive to settle the amount.
According to a letter written by former Cabinet Secretary in the Ministry of East African Community (EAC), the Arid and Semi-Arid Lands and Regional Development, Ms Rebecca Miano, to ex-Foreign and Diaspora Affairs CS, Dr Alfred Mutua, dated, June 9, 2023, she acknowledged that the Ministry owed the Spanish company TYPSA Sh1,241,499,172.
“We have consistently made appeals for funding to pay the pending bill to the National treasury, the latest request being through my letter of December 14, 2022 Ref: MRD/ENSDA/9/7/2/VOL2 (25),” Ms Miano who has since been moved to the Ministry of Trade wrote.
In this regard and by a copy of this letter, she noted, “I wish to indulge the Cabinet Secretary to the National Treasury on this matter of the pending bill for TYPSA.”
“Finally, I acknowledge that it is important to balance between mutuality beneficial relations between Kenya and Spain and indeed other foreign countries,” she added.
TYPSA had been contracted for consultancy services for the feasibility study and detailed design on Lower Ewaso Ng’iro South River Multi-Purpose Dam.
Dr Mutua had earlier on May 30, 2023 written to Ms Miano after attending Kenya-Spain joint business forum in Madrid on April 27 where he said the matter arose.
“During my bilateral discussions with Foreign Minister Jose Bueno, the Minister brought up the issue of a pending payment of 8 million euros (Sh1.2 billion) owed to the Spanish company TYPSA. According to the Spanish Government, the Ministry of Regional Development awarded a contract to TYPSA for the consultancy and engineering at the Ewaso Ng’iro dam in 2012. Though the project successfully concluded, the ministry was informed that the payment had not been effected yet, owing prioritisation of payments by the National Treasury,”
“In addition, Foreign Minister Jose Bueno indicated that the Spanish Government would welcome a speedy and appropriate resolution of this matter, including exploring the possibility of staggered payments. In this respect I promised my counterpart that the issue would be given due and suitable consideration by the Kenyan government,” Dr Mutua wrote.
He went on: “The purpose of this correspondence, Waziri (CS), is to invite your kind indulgence and engagement on the aforementioned subject. I would also welcome thoughts on the issue, particularly given the need for balance between mutually beneficial relations between Kenya and Spain and other national strategic considerations.”
Cabinet Secretary for Treasury, Prof Njuguna Ndung’u, had also written to the Ministry of EAC, calling for prioritisation of payment to the company following talks between president Ruto and the Spanish leader Pedro Sanchez between October 25 and 26 when he visited the country last year.
“In view of the foregoing and as per the president’s directive, we wish to request your ministry urgently to prioritise, budget for the said pending payment to the TYPSA, Spain within FY 2022/23,” Prof Ndung’u wrote, in a letter also copied to Chief of Staff and Head of Public Service, Mr Felix Koskei.
President Ruto had committed to ensure the matter was settled, but Treasury is yet to honour the directive.
“Kenya welcomes the interest of Spanish companies in various sectors including tourism, agriculture, infrastructure, water management and renewable energy.”
“I commit to strengthening our economic and investment relations between our two countries and appreciate that bilateral flows have shown a very positive growth. We are strong believers that the future is that of cooperation, working together and building a common market,” President Ruto said then.
Mr Sanchez on his part noted that Spain and Kenya would walk together, but failure to settle the pending bill to TYPSA is now threatening the cordial relationship between Nairobi and Madrid.
“We have many areas in which we will walk together and strengthen our bilateral cooperation. Spain is a potential ally of Kenya,” Mr Sanchez said during his Kenyan tour in October last year, barely a month after President Ruto had taken office.
On Wednesday, Treasury CS said that the country is beset by cash-flow challenges due to payment of maturing debts, delaying disbursement of funds for development projects, noting that the country was straining.
“We have been pushed to a difficult financial position by short term debt repayment, high interest rates and the depreciating shilling, which has increased our expenditure by Sh145 billion” Prof Ndung’u said, assuring, however, that “we are not facing an insolvency crisis.”
In June, the government allocated more than Sh60 billion for pending bills in its ambitious plan to tackle the sticky issue in the country.
This was announced by President Ruto when he assented to the Supplementary Appropriation Bill (National Assembly Bill No. 4 of 2023) at State House.
The Bill authorised the issuance of Sh200.7 billion out of the Consolidated Fund.
The President said the move would ensure uninterrupted delivery of services to the people and stimulate economic performance.
He said the Bill had reduced the supply by Sh143.7 billion to various votes, which would lower the fiscal deficit from 6.2 per cent of GDP to 5.7 per cent of GDP.
