Africa-Press – Kenya. The managements of water companies in the counties are for the first time set to face senators to explain the expenditure of millions they control.
This comes amid reports of massive financial malpractice and huge pending bills that have threatened to bring down the companies.
Senate County Public Investments and Special Funds (Cpisp) Committee has dispatched summon letters to the agencies as it started investigations into the financial books of the companies.
“We want them (the agencies) to explain to us how they have been spending public [money] they are entrusted with,” committee chairman Godfrey Osotsi said.
The new committee was created in the amended standing orders to inquire into the Cpisp by the devolved units.
It was hived off from the County Public Accounts and Investments Committee, which was split into Cpisp and County Public Accounts Committee.
“Counties have made so many investments but, as the Senate, we have never scrunitised their financial books as the oversight House,” Osotsi said.
Recent audit reports by Auditor General Nancy Gathungu revealed that the companies could soon be on their financial knees due to massive wastage and non-payment of bills by their customers.
Many firms, the reports indicate, also risk losing valuable assets, including prime parcels of land and vehicles.
The firms lack ownership of documents such as title deeds and logbooks to secure the items from theft.
The reports for the financial year ending June 30, 2021, reveal that many firms are owed billions of shillings by their customers.
This has pushed many of the companies to declare them as bad debt, condemning them to a financial hole.
This is even as the firms incur huge losses due to non-revenue water, mainly caused by leakages and wastage.
In Nyeri, the Nyeri Water and Sanitation Company Limited provided Sh41.94 million as doubtful debts for the year under review.
“However, the basis of provision for doubtful debts of Sh41.94 million was disclosed in the financial statements or explained,” the report states.
In Laikipia, Nanyuki Water and Sewerage Company approved the write off of the special bad debts of Sh36.60 million
However, the move was not approved by the county Finance executive.
“This is contrary to section 150(2) of the PFM Act, which requires an accounting officer for a county government entity to obtain approval of the county executive committees members for finance to write off a loss,” the report states.
The auditor questioned the criteria of selecting debtors who qualified for write off, stating that most of them were entities that still exist and the management ought to have planned for payments.
The firm lacks ownership documents for a Sh30 million land acquired from Nanyuki High School.
It also lacks logbooks for four motor vehicles and a motorcycle valued at Sh4.16 million.
The company, the reports reveal, lost Sh12.68 million to wastage. Some 40 per cent of the water supplied by the firm did not generate revenue.
This was over and above the allowable loss of 25 per cent provided by the Water Services Regulatory Board guidelines.
Machakos Water and Sewerage Company Limited is owed Sh123.08 million by its customers against the provision of Sh39.28 million for bad debts.
“Some balances had been outstanding for longer and may require specific provision or write-off from the books,” the auditor said.
The report shows that the firms lost Sh60.98 million in revenue due to wastage and leakages.
This is the value of 530,263 cubic metres that were not billed to customers during the year.
“The non-revenue water exceeded the 25 per cent threshold of total production set in the guidelines issued by the water services regulatory board,” the report states.
(edited by Amol Awuor)
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