Kenya Ports in trouble over unexplained huge spending

MOMBASA, KENYA: The Auditor General has questioned the Kenya Ports Authority's (KPA) spending for the 2012/2013 financial year, as it emerged that the parastatal owed its creditors more than Sh11.6 billion in that year.

A report by the Auditor General for the period ending June 2013, also questions KPA's increased operational expenses.

The Auditor General says the increase in operating revenue indicated that there was a revenue leakage, which may affect the long-term sustainability of business at the port.

The report signed by the Auditor General Edward Ouko on May 16 this year, is the basis of Parliament's Public Investment Committee’s (PIC) investigation of KPA's accounts.

The report in part reads: "...as reported in the financial statement for the year ending 30 June 2013, operational revenue increased from Sh27 billion in the current year, being a marginal increase of 15 million (0.06 percent). Operational expenses on the other hand increased from Sh18.5 billion to 21 billion in the 2011/2012 to Sh21.1 billion in the current year."

It goes ahead to say the increase in operating revenue does not match the increase in operating expenses.

The report notes that KPA's financial position reflects borrowings totalling Sh11.6 billion including a Sh9.7 billion loan owed to Japan International Corporation Agency for port expansion.

DEVELOPMENT LOANS

In reply, KPA says it obtained loans from CFC Stanbic Bank and JICA for the purpose of funding the acquisition of cargo handling equipment and the Mombasa Port Development project.

The parastatal also says it is servicing an unspecified amount loaned to it by the International Development Association (IDA) after the Kenya Government stood surety. The loan is supposed to be cleared in 2045.

"The agreement was signed on April 5, 2006 between the Republic of Kenya and the International Development Association. The borrower shall pay the principal amount of credit by one semi-annual instalment starting May 2016 and ending Nov 2045," says KPA.

The report further indicates that there was an understatement of KPA's total borrowing after Sh377 million was excluded from the JICA loan balance, which was disbursed on June 28, 2013 but recorded in KPA books in July 2013.