Kenya defaulted on loan repayment over Kimwarer, Arror and Itare dams
A report by the Auditor General Nancy Gathungu shows Kenya defaulted on three loans totaling Ksh.5.1 billion.
The loan servicing was meant to construct Arror, Kimwarer and Itare dams.
A report for the year ended June 30, 201 reveals that Kenya defaulted on servicing Ksh.5.1 billion for the three dams, two of which (Kimwarer and Arror) sparked public uproar over how the National Treasury under the ousted Henry Rotich overpriced their funding.
The report listed the total arrears as Ksh.757.4 million for Arror Dam, Ksh.2.9 billion for Itare Dam and Ksh.1.2 billion for Kimwarer.
For Arror Dam, the default was on the interest payable whereas for Itare, was on Ksh.2.4 billion on the principal amount and Ksh.466 million on the interest.
For Kimwarer, the default was on Ksh630.4 million on the principal and Ksh.577 million on the interest.
The principal amount disbursed was Ksh.11.2 billion for Arror; Ksh.17.4 billion for Itare and Ksh.8.8 billion.
According to AG Gathungu, 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.
“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,” reads the report.
“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.”
On September 18, 2019, President Uhuru Kenyatta ordered a stop to the construction of the Kimwarer dam in Elgeyo Marakwet County.
A technical committee had established that the Ksh.22.2 billion Kimwarer Dam was found to have been overpriced and that the project is neither technically nor financially viable.
The Technical Committee certified that the Arror Multipurpose Dam Project was economically viable but noted that it was overpriced.
Arror only required about 250 acres of land at a cost of Ksh.15.4 billion with power and Ksh.13.1 billion without power.
Under Rotich’s reign, the dam was priced at Ksh.28.3 billion.
The Italian firm was contracted by Rift Valley Water Services Board (RVWSB) to construct the Irate dam in Kuresoi-Molo, in Nakuru County for Ksh.36-billion.