Debts headache for governors as contractors dodge auctions

A majority of governors are in a dilemma as counties sag under massive debts.

Pending bills grew from Sh37.8 billion in 2014/15 financial year to Sh37.3 billion in 2015/16 to peak at Sh96.5 billion last June.

The debts had accumulated to Sh99 billion by the end of September last year.

Recently, the office of the Controller of Budget Agnes Odhiambo, in a report, cited the inability to meet revenue targets, reckless spending and irregular hiring of staff as some of the causes of the debts accumulated over the last four years.

Previous reports by Ms Odhiambo and Auditor-General Edward Ouko on the spending in the counties in the past four years have attributed the huge pending bills to failure by governors to effectively manage the procurement function.

Last month, Deputy President William Ruto challenged governors to develop mechanisms of clearing massive debts in counties. But the county bosses say the problem will not end unless cash flow is addressed. Some contractors are now living in fear of auction as some counties fail to pay debts.

In Meru for instance, contractors have received warnings from commercial banks due to delayed payment.

FINANCIAL WOES

Meru contractors and suppliers association chairman Nturibi Etirikia said several have received the notices but were not ready to go public on their financial woes.

“Many banks in Meru are not willing to give LPO financing for county government contracts. They feel county contracts are too risky for security. They are however financing contracts by other national government institutions. It is now very difficult to do business with the county government,” Mr Etirikia said adding some contractors are yet to be paid for the last two years.

Ms Judith Kagwiria, a contractor, said the county owes her Sh7 million and the delays had led to the auctioning of her property. She said she had completed several projects including construction of markets and drilling borehole in Mikinduri and Kianjai.

Recently, Meru County’s pending bills verification committee recommended the payment of Sh200 million out of Sh1.1billion owed to contractors by the previous administration.

Deputy Governor Titus Ntuchiu, who is also the Finance executive, said they were in the process of paying the Sh200 million verified by the committee.

In the North Rift region, counties are also grappling with huge bills that are disrupting delivery of services.

In West Pokot, many contractors complained of unpaid dues despite completing work.

DEJECTED CONTRACTORS

Jyan Construction Services Company, which set up the Agricultural Training College in Kapenguria that has now been elevated to a university, is one of the dejected contractors.

The operations manager and marketing of the firm, Ms Winnie Mutheu, said the project, which cost Sh350 million, has an outstanding debt of Sh26 million.

She said the building is complete and has been handed over to the county government.

 “The county government knows it owes us the money and they should pay it. We are promised each day that we shall be paid but nothing has been done,” said Ms Mutheu of the construction started during former Governor Simon Kachapin’s administration. 

Governor John Lonyangapuo has accused the contractors of inflating costs yet they did shoddy work.

“We note with concern that most of the projects were non priority. What was the need for instance of setting up a headquarters in every sub-county yet our people are grappling with abject poverty?” asked Prof Lonyangapuo.

COSTS INFLATED

The audit by the National Construction Authority (NCA), which was carried out between August and October 2017, indicated the cost of projects was highly inflated and tenders awarded to briefcase contractors leading to billions of shillings being lost.

“There was a total disregard of procurement laws and lack of professionalism, which saw contractors awarded lucrative tenders that they had no capacity to handle,” reads the NCA report.

In addition, majority of the contractors were not registered by NCA and therefore did not have a valid practicing permits, said the report.

On inflated costs, a hall in Kapenguria, initially valued at Sh26 million, later cost Sh41 million but work is not complete.

Kisumu Governor Anyang’ Nyong’o set up a special task force on pending bills to look into Sh3 billion owed to service providers that did business with the previous regime.

In Nandi County, Governor Stephen Sang’s administration is grappling with Sh800 million owed to contractors, with most of the debt inherited from his predecessor Cleophas Lagat.

Governor Sang, who held a crisis meeting with the contractors, said the county government will not make any payment until an ongoing audit by the Auditor General to determine the work done dating back to 2013 is concluded.

AUDIT REPORTS

“The contractors will have to wait until the audit is complete. Their payment will depend on the outcome,” said Governor Sang.

But the contractors led by Mr Isaac Sang insist the county government must pay them.

“The county government should speed up payment since we provided services and we have documentations indicating projects. We should not be subjected to further financial problems,” said Mr Sang.

The contractors have questioned why the county failed to pay them even after the Assembly directed the Executive to pay them before end of the month. The road contractors have threatened to move to court unless their demands are met.

According to the annual County Budget Implementation Review Report for 2016/2017, Turkana had pending bills of Sh2.9 billion, Nandi Sh813.5 million, Elgeyo Marakwet Sh785 million and Baringo Sh91.4 million as at June 30, 2017.

In Kisii, Finance Executive John Momanyi said the funds often come in piecemeal and close to the end of the financial year. This, he said, complicate the mode of their expenditure.

“This had been the only major source of the pending bills we deal with regularly,” said Momanyi.

PENDING BILLS

Tharaka-Nithi County government says it will not pay Sh342 million, part of the Sh1.07 billion of the pending bills inherited from the previous regime. Mr Anderson Mutembei, the Tharaka-Nithi County Contractors Association organising secretary said he had to sell his vehicle to pay loan after he as served with an auction letter.

An audit report revealed the sum is part of Sh587 million owed to suppliers, contractors, lawyers and unpaid subsistence allowances for staff.

In Laikipia, a team auditing the Sh1.3 billion bills handed over to Governor Ndiritu Muriithi by his predecessor Joshua Irungu has unearthed that almost half of the bills were not supported by requisite documents casting doubt on their authenticity.

Among the non-existent projects billed for was the “modern kiosks” at Ol Moran trading centre and electrical works at Rumuruti Hospital.

OVERBILLED BY SH76.3 MILLION

When auditors first visited the Ol Moran site on November 2017, there were no kiosks, even though the invoice was dated May 14, 2017, for Sh3.8 million had been certified for payment.

The Auditors have since verified about 124 out of the submitted 241 pending bills on the development vote with a value of Sh311 million. But on-site audit revealed works worth Sh234.3 million indicating the county was overbilled by Sh76.3 million.

 Reported by Wycliff Kipsang’, Oscar Kakai, Florah Koech, Barnabas Bii, Magoti Obebo, Steve Njuguna, Waikwa Maina,  Tom Matoke, Stepehen Odour, Alex Njeru, David Muchui and Kennedy Kimanthi