Road agencies and varsities top entities with high pending bills

Construction of Kenol- Sagana - Marwa highway, on May 31, 2022. Road agencies owe firms the largest amount at a combined Sh143 billion. [File, Standard] Parastatals drawn from just four ministries accounted for more than 83 per cent of the money that State corporations owed businesses as of June this year. The entities housed by the Ministries of Roads and Transport, Education, Energy and Petroleum and Health owed different businesses a combined Sh336.81 billion in pending bills. This translates to 83 per cent of the Sh404.33 billion that State corporations and other government entities owed firms as of June 2025, according to a new report by the Controller of Budget (CoB). Pending bills for the national government stood at Sh525 billion as of June this year, with parastatals accounting for Sh404.33 billion or 77 per cent of the unpaid cash. The balance of Sh120.51 billion (23 per cent) is owed by Ministries, Departments and Agencies (MDAs). Road agencies owed firms the largest amount at a combined Sh143 billion. About half of this was owed by the Kenya National Highways Authority (KeNHA) at Sh72 billion. On its own, KeNHA accounted for 17.8 per cent of the pending bills owed by State corporations. Deducting Taxes The Kenya Rural Roads Authority (Kerra) is also among the entities holding large sums of money owed to contractors, which stood at Sh50.6 billion as of June 30 this year. Other entities with huge amounts of pending bills include the Kenya Electricity Transmission Company (Ketraco) at Sh24 billion, Kenya Power at Sh17.49 billion and the Rural Electricity and Renewable Energy Corporation (Rerec) at Sh13.6 billion. State-run universities also owed firms billions of shillings in pending bills, with the University of Nairobi topping the list with Sh13.55 billion, followed by Kenyatta University at Sh13.21 billion. COB noted that other than businesses, State entities have also been deducting taxes, retirement benefits, employee savings and health insurance funds but not remitting to the respective institutions. "The State Corporations' pending bills include payments due to contractors or projects, suppliers, unremitted statutory and other deductions, and pension arrears for the Local Authorities Pension Trust," said COB in the report on implementation of the budget for the 2024/25 financial year. The report noted that in addition to difficulties faced by businesses that have to wait for years to get their pay, the government has also suffered due to penalties levied by companies for the lengthy waiting periods. COB noted that of the total Sh404.33 billion owed by State corporations, Sh25.29 billion was in penalties. "The accumulation of pending bills restrains business cash flows, resulting in liquidity constraints, especially for SMEs, as they have to endure the long wait to settle overdue payments. This may force SMEs to either scale back operations, lay off workers, or shut down operations," said COB in the report. "It also leads to high government business costs due to the accumulation of interest charges and penalties on unpaid invoices, eroding trust between the government and the private sector." Money owed to contractors building infrastructure projects, particularly roads, accounted for more than half of the pending bills by State corporations at Sh211.04 billion as at June this year. Other notable areas include pension arrears (nine per cent) and consumables and general supplies (eight per cent). The government has, in recent months, started to pay road contractors using money borrowed through collateralising the Road Maintenance Levy. The government in the past explained that by securitising Sh7 of the Sh25 paid by motorists at the pump for a litre of diesel or petrol, it would raise Sh175 billion. Some of the money raised will be used to settle pending bills owed to road contractors. Treasury has recently said contractors had been paid Sh60 billion and are set to receive another Sh60 billion in the coming weeks. The government, in 2023, constituted a pending bills verification committee to audit claims by private sector players and also recommend how the Treasury could effectively deal with the matter. Treasury said preliminary reports by the committee show 65,627 pending bill claims valued at over Sh571.6 billion were submitted. As of June this year, the committee had analysed 57 per cent of the claims received, valued at Sh522.9 billion. Out of this, a total of Sh229 billion was recommended for settlement. This is less than half of the Sh522.9 billion pending bills analysed, a possible indication of the level of fraudulent claims, but also the level of penalties imposed by firms on the government owing to delays in paying them.

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