Kenya pays Ksh.1.7 billion for ‘missing’ loans

Kenya pays Ksh.1.7 billion for ‘missing’ loans

Kenya has paid Ksh.1.7 billion as ‘booking’ fees on loans it is yet to utilize even after signing the loan agreements.

This is according to new disclosures by the Office of the Controller of Budget (COB) where the loan commitment fees cover 17 signed but un-disbursed credit lines.

Kenya typically pays commitment fees as means of guaranteeing that creditors will keep funds available for its utilization at a latter time.

The Controller of Budget however warns of lost income from the payments if funds borrowed are not utilized immediately.

“This shows the inefficiency of the implementing agency that has been granted the loan in their effective absorption of funds in completion of their projects. The government has to ensure that funds borrowed have to be utilized immediately to prevent loss of income in such payments,” the COB says.

“We recommend that these loans should be canceled and this will reduce the loan book balance and consequently save tax payers payments on the commitment fees.”

Kenya has paid Ksh.1.1 billion shillings in total commitment fees and another Ksh.530.9 million shillings in other fees.

The fees relate to 17 infrastructure projects and whose total financing is estimated at Ksh.3.7 billion.

The projects include the construction of an underground electric power distribution network around Kilimani, Ngong Road, Westlands and Ngara whose implementing agency is Kenya Power.

Other projects include the expansion of the Jomo Kenyatta International Airport (JKIA) airfield by putting up a second runaway, a project tasked to the Kenya Airports Authority (KAA) and phase I of the Bagamoyo-Horohoro-Lunga Lunga-Malindi road.