NAIROBI, Sept. 5 – More than four-fifths of all pending bills owed by state corporations are tied up in just four ministries, a new report has revealed, raising fresh concerns about the government’s growing debt to contractors and suppliers.
Figures from the Controller of Budget show that parastatals under the ministries of Roads and Transport, Education, Energy and Petroleum, and Health together owed Sh336.8 billion to businesses by the end of June. That amounts to 83 percent of the Sh404.3 billion in unsettled claims across all state entities.
In total, pending bills for the national government stood at Sh525 billion as of June, with parastatals accounting for the lion’s share. Ministries, departments and agencies owed the balance of Sh120.5 billion.
Road projects have been hit hardest. The Kenya National Highways Authority alone owed Sh72 billion, almost half of the Sh143 billion owed by road agencies. The Kenya Rural Roads Authority followed with Sh50.6 billion.
Other heavily indebted corporations include the Kenya Electricity Transmission Company (Sh24 billion), Kenya Power (Sh17.5 billion), and the Rural Electrification and Renewable Energy Corporation (Sh13.6 billion).
State-run universities are also in deep arrears. The University of Nairobi topped the list with Sh13.6 billion, followed closely by Kenyatta University at Sh13.2 billion.
The watchdog noted that some institutions have deducted taxes, pension contributions, and health insurance payments from staff but failed to remit them to the relevant bodies. “The State Corporations’ pending bills include payments due to contractors or projects, suppliers, unremitted statutory and other deductions, and pension arrears,” the report stated.
The delays have left many businesses struggling to stay afloat. “The accumulation of pending bills restrains business cash flows, resulting in liquidity constraints, especially for SMEs,” the report warned. Small firms, it added, may be forced to scale back operations, shed jobs, or shut down entirely.
Late payments also come at a cost to the state. Penalties and interest charges on unpaid invoices amounted to Sh25.3 billion by June. “It erodes trust between the government and the private sector,” the Controller of Budget said.
Contractors building infrastructure projects have borne the brunt, with road firms owed Sh211 billion, more than half of all pending bills by state corporations. Pension arrears and general supplies accounted for smaller shares.
In recent months, the government has begun paying some contractors using money borrowed against the Road Maintenance Levy, which is raised from fuel charges. Officials have previously said securitising part of the levy could raise more than Sh170 billion.
Still, the backlog remains vast. And for the businesses waiting to be paid, the question is not how much is owed, but how long it will take before the cheques arrive.
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