Sh6.33 billion of taxpayers’ money has gone down the drain after the Kenyan government spent it for a ghost fertilizer plant that was never built.
According to a state audit report, the payment linked to a Belgium bank started in the 1970s with the recent amount lost to botched Ken-Ren Chemical and Fertiliser plant totaling to Sh6.33 billion.
Kenya had earlier paid Sh3.9 billion to Australian and Belgium governments for the failed construction of fertilizer plant at Changamwe, Mombasa County.
“The Government of Kenya has paid a payment of Euro 21.2 million (Sh2.48 billion) towards settlement of government guaranteed debts incurred in 1970 on account of Ken-Ren Chemical and Fertilizer Company,” reads a recent report by the Public Accounts Committee (PAC) on Government finances.
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The Principal Secretary at National Treasury, Julius Muia, told the PAC that the payments followed a case filed by the Belgian Bank, Ducroire at the Court of Arbitration of the International Chamber of Commerce which found the Kenyan Government liable as guarantor hence to pay the company 21.2 million Euros.
In addition, the Kenyan government had entered into an agreement with the now collapsed American firm N-Ren for the construction of fertilizer plan in 1970 at Sh350 million and interest rate of 8.5 percent.
The debt has currently risen to breach the Sh6 billion mark.
Muia, during the PAC meeting stated that Kenya had cleared the debts and compensation associated with failed fertilizer plant, with the treasury arguing that the billions of shillings paid were to avoid a negative credit rating that would lock the country out of international debt markets.
“Even though the full amount of the debt is now settled, the committee is deeply concerned that government spent such colossal sums of money on a project which did not take off and against which no value for money was achieved,” said PAC Chair opiyo Wandayi in audit report.
This comes at a time when the state and government is struggling with balancing its budget with the Kenya Revenue Authority (KRA) missing its target in the last financial year.
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