KenGen, KPA Cut State-Guaranteed Debt by Sh11.6 Billion as KQ Loan Burden Grows

The Kenya Electricity Generating Company (KenGen) and the Kenya Ports Authority (KPA) have collectively repaid Sh11.6 billion of their state-guaranteed loans, helping reduce Kenya’s overall stock of government-backed debt, even as Kenya Airways (KQ) continues to struggle with servicing a similar facility.

A budget implementation review report by the Controller of Budget (CoB) Margaret Nyakang’o for the nine months ending March 2026 shows that KPA and KenGen made significant repayments on their guaranteed loans during the period.

KPA repaid Sh6.77 billion, while KenGen reduced its guaranteed debt obligations through continued loan servicing, contributing to a decline in the total stock of guaranteed loans.

However, Kenya Airways did not make any repayments on its guaranteed loan during the review period. Instead, the airline’s outstanding guaranteed debt increased by Sh52 million to Sh9.74 billion as of March 2026.

Nyakang’o noted that no funds had been allocated in the 2025/26 financial year budget specifically for the settlement of guaranteed loans.

“There was no budget allocation for settling guaranteed loans in the financial year 2025/2026,” Nyakang’o said in the report.

According to the CoB, fluctuations in the exchange rate between the Kenya shilling and the US dollar contributed to the increase in Kenya Airways’ guaranteed debt portfolio.

“Notably, the increase in guaranteed debt for Kenya Airways was as a result of movements in the exchange rate of the Kenya shilling against the US dollar, which varied from Sh129.23 in June 2025 to Sh129.93,” Nyakang’o said.

The report indicates that the repayments by KPA and KenGen helped reduce the total stock of state-guaranteed loans to Sh71.53 billion as of March 2026, down from Sh83.24 billion recorded in June 2025.

Government-guaranteed loans are facilities extended to state corporations with the backing of the National Treasury, which assumes responsibility in the event of default. The reduction in the guaranteed debt stock is expected to ease pressure on the government’s contingent liabilities, although the continued growth of Kenya Airways’ obligations remains a concern.