Controller of Budget tells counties to clear Sh90 billion debt

The Controller of Budget has weigned into the tussle between the county governments, contractors, suppliers and creditors over debts running estimated at Sh90 billion.

Ms Agnes Odhiambo has written to the county authorities asking them to offset the huge debts.

In a letter dated March 1 to all governors and speakers of the County Assemblies, the Controller of Budget asked them to assure clients and firms of commitment to pay.

She was categorical that the counties have an obligation to honour contracts entered into with suppliers, creditors and contractors and therefore must pay them.

However, Ms Odhiambo cautioned that before making such huge payments, the authorities must physically evaluate the work done.

Key projects

“We are asking you to pay, that is alright. But you must verify if the projects being paid for are noteworthy and were actually done to the specifications in the contract,” the letter read in part.

In the letter to the county bosses, copied to the Treasury, the Commission on Revenue Allocation and other relevant authorities, the Controller of Budget described the debts as a burden.

She wondered how counties incurred huge debts yet they were receiving funding from the exchequer each financial year.

Many contractors have been asking the governors and speakers of the Assembly to offset the debts which are long over due and in breach of the contract’s lease period.

Yesterday, Kisumu County Speaker Onyango Oloo called an urgent public service board meeting where he expressed concerns that the debts were a burden.

“Each month, we have to balance between paying the statutory firms such as NHIF and the contractors and as well accumulated utility bills owed to Kenya power,” he said. Mr Onyango acknowledged that they had received a letter from Controller of Budget to authenticate the bills, validate and make arrangements to pay.

Overhead costs

Kisumu Governor Anyang’ Nyong’o’s administration reportedly inherited Sh3.5 billion debt from the previous regime.

But Prof Nyong’o and Kisumu Senator Fred Outa rejected the figure saying it was inflated. They ordered for a forensic audit through a task force headed by Thadeus Okwara.

The task force capped the debt at Sh1.5 billion.

In the latest 2016/17 financial year report, Odhiambo listed 43 counties, which have pending bills totaling to Sh35.84 billion.

Kisumu (Sh1.8 billion), Mombasa (Sh3.95 billion), Turkana (Sh2.9 billion), Nakuru (Sh2.8 billion) had the highest pending bills. Nairobi tops the list with Sh60 billion.

Only Kitui County reported nil bills as at June last year.

Contractors and suppliers have lamented that the delayed payments had stalled their operations.

They said some of them who borrowed huge monies from banks based on the signed contract leases and local purchase orders (LPO), were now running into overhead costs.

Sources among the contractors who sought anonymity, revealed that some of them had even closed business due to lack of cash flow.

Odhiambo has directed the county authorities to file records of pending bills at the Office of the Controller of Budget and Auditor General within the next two months.

This will facilitate validation and sanction of payments of verified debts to forestall the woes facing the creditors, suppliers and statutory firms.