The government has been asked to write off a Sh2.5 billion debt owed by Kenya Utalii College (KUC) as it is facing a serious financial crisis.
Tourism Cabinet Secretary Najib Balala said the college is currently indebted to the tune of Sh3 billion.
Of that liability, Sh2.5 billion accumulated from interest and penalties on a Sh140 million loan the college received from the government in 1996.
The money was used to refurbish Utalii Hotel in Nairobi between 1996 and 2000.
Mr Balala said the college had by December last year repaid Sh13 million whereas the loan along with interest and penalties had accrued to Sh2.5 billion.
“I request the government to waive the interest and penalties accrued on the loan in an effort to improve the college’s working capital,” Mr Balala said.
The college, he added, plays a pivotal role in tourism because a majority of its graduates work in the hospitality industry.
“Efforts must be made to save the college from the financial woes for the sake of students who will be leaders of tomorrow in the industry,” he said.
In the 2015/2016 financial year, the college had total revenues of Sh711 million, with Sh168 million coming from its own sources, Sh260 million from government transfers and Sh283 million from the Tourism Fund.
Speaking to the Nation by phone, Mr Balala said KUC was unable to service the Sh140 million loan and the interest and penalties accrued due to dwindling finances.
“The hotel, whose revenues were meant to repay the loan, is a training laboratory for the college. Its profitability is highly compromised by capacity and high operational costs due to its orientation as a training unit.”
Mr Balala called on the Tourism Fund to increase its allocation to the college so it meet its operational costs.
Mr Balala said the financial challenge has not affected training at the college.