The Treasury has revealed that it will tap into taxpayers money to bail out nine State-owned firms, including Kenya Power, from commercial loans amounting to more than Sh104.84 billion.
The loans pose potential financial burden on the taxpayer as the proceeds were invested in priority projects.
The credit was advanced by commercial lenders based on the “sound financial position” of the State corporations, which may struggle to honor repayments in future.
“Such SOEs (state-owned enterprises) borrow to finance strategic and high priority projects in the national development agenda,” the Treasury says in the annual debt report.
“The non-guaranteed loans, therefore, pose a contingent liability risk and potential fiscal commitment to the national government.”
Kenya Power accounts for more than half of the non-guaranteed debt, which the Treasury could potentially have to step in and repay.
The electricity distributor had Sh53.84 billion in debts as of June 2020, the bulk of which are from Standard Chartered Bank in three facilities.
The loans from StanChart are Sh27.72 billion (World Bank-guaranteed) to be repaid in five to 10 years for refinancing Kenya Power’s costly loans.
The firm also owes NCBA Sh6.75 billion, which will mature in more than 10 years according to Business Daily.
They owe Equity Bank (Sh4.06 billion which matures in less than four years), and Rand Merchant Bank of South Africa (Sh1.26 billion which will be due in less than four years).
The Treasury could also come to the aid of Kenya Pipeline Company, which has a Sh19 billion syndicated loan from Stanbic Bank, NCBA, StanChart, Co-operative Bank, and South Africa’s Rand Merchant Bank.
This is for construction of a pipeline that matures in less than four years.
Other firms which may expose taxpayers to financial commitments include KenGen, which has a loan of Sh13.62 billion.
This is composed from credit from NCBA (Sh8.36 billion for wellheads), Co-op Bank (Sh2.33 billion for drilling of 89 wells), HBSC of London(Sh1.44 billion for purchase of rigs) and France Development Bank (Sh801 million).
Kenya Airports Authority debt stood at Sh11.82 billion as of June 2020, comprising two facilities from France Development Bank — Sh6.77 billion.
Jomo Kenyatta University of Agriculture and Technology could potentially expose taxpayers to Sh2.74 billion debt in three facilities from KCB for infrastructure development.
Kenyatta University’s debt was about Sh1.26 billion from Equity (Sh700 million) and Co-op Bank (Sh564 million).
The University of Nairobi had a loan of Sh783 million from Absa Bank.