Treasury defaulted on repayment of Ksh5.1B loan for 3 dams - Auditor General report

The report for the year ended June 30, 2021 states a review of records held by the National Treasury’s Commonwealth Secretariat Debt Recording and Management System revealed that the Government had defaulted on servicing Ksh5.1 billion for three loans for the dams advanced by an international commercial bank.

For Arror Dam, the default was on the interest payable; for Itare, it was on Euro20,026,363 (Ksh2.4 billion) on the principal amount and Euro3,794,129 (Ksh466 million) on the interest. For Kimwarer, the default was on Euro5,126,759 (Ksh630.4 million) on the principal and Euro4,692,545 (Ksh577 million) on the interest.

The principal amount disbursed was Euro91,852,267 (Ksh11.2 billion) for Arror; Euro141,552,608 (Ksh17.4 billion) for Itare and Euro71,878,751 (Ksh8.8 billion).

The report stated that the credit agreements for the loans were not provided for audit review to confirm the terms and if the termination of the credit was conducted in accordance with the provisions in the respective agreements.

It further stated, "Management indicated that the lender has cancelled the remaining balance and the credit agreements for the three dams are in the custody of the Directorate of Criminals Investigation as the matter is in court."

"The default on debt repayment exposes the Government to risks of legal suits that may lead to punitive penalties and subsequent loss of public resources."

Former Treasury CS Henry Rotich and other senior officials were charged with fraud.

Last month, Rotich failed in his bid to have fraud charges against him in the Arror and Kimwarer dam saga dropped.

*The currency conversions are using rates as of May 21, 2022 of Euro1=Ksh122.98