Cash-Strapped Parastatals Milking The Taxpayer's Dry
Cash-Strapped Parastatals Milking The Taxpayer’s Dry
Several parastatals are in the red, surviving solely on taxpayer support.
Auditor General Nancy Gathungu says in a string of reports that the number of state-owned enterprises in financial distress seems to grow by the day.
The worrying trend will likely compel the Treasury to fork out more public cash to get the firms out of financial ICU.
Most parastatals are run as businesses that generate revenue to keep them afloat and even make a profit.
At least eight state corporations have been declared cash-strapped by the Auditor General in the latest audit. Gathungu fears the number could be higher.
The alarming report comes at a time when MPs stumbled on a state agency with 13 board members enjoying allowances in millions of shillings, yet it has no employee.
The Kenya Fish Marketing Authority board, MPs learned, was established eight years ago yet it has not carried out any work because no employee has ever been hired.
The agency has 13 board members, whose perks in the last financial year amounted to Sh10 million – out of the Sh51 million allocations.
This highlights the level of wastage in government that Gathungu recommends must be brought to an end.
Her recent report flags several state agencies milking taxpayers dry, with nothing to show in return.
Some of the big names in financial trouble include the Kenya Broadcasting Corporation, South Nyanza Sugar Company (Sony), Rivatex, Kenya Bureau of Standards, National Museums of Kenya, National Oil Corporation of Kenya, Kenya Post Office Savings Bank (Postbank), Postal Corporation of Kenya, Nzoia Sugar, East Africa Portland PLC and power transmission giant Kenya Electricity Transmission Company (Ketraco).
In the audit report for the 2022-23 financial year, Gathungu casts doubt on the sustainability of KBC, which the report indicates is operating on negative capital.
The public broadcaster’s liabilities stand at Sh94,108,387,000 against assets valued at Sh1,301,992,000. This translates to Sh92,806,395,000 negative working capital.
“Further, the corporation has continued to make losses resulting in accumulated losses of Sh89,107,849,000. These are indicators of the corporation’s uncertainties on meeting its financial obligations,” the report reveals.
In another bizarre audit revelation, the only surviving state sugar miller – South Nyanza Sugar Company (Sony) – operates with Sh7.8 billion liabilities, exceeding its Sh817.6 million assets and resulting in a negative working capital of Sh7 billion.
Gathungu says there is serious uncertainty about the future of the business.
At the Postal Corporation of Kenya, the assets are valued at Sh2.3 billion against Sh9.1 billion liabilities, which means a negative working capital of Sh6.7 billion.
“These conditions indicate the existence of material uncertainty, which may lead to significant doubt on the corporation’s ability to continue as a going concern,” the report indicates.
The auditor has also raised a red flag on the financial health of the Kenya Bureau of Standards after it emerged the corporation has been operating with a negative working capital of Sh930.5 million.
Cash-Strapped Parastatals Milking The Taxpayer’s Dry
