The Nairobi City Water and Sewerage Company (NCWSC) is on the spot for irregularly spending more than Sh1.2 billion customer deposits in the year ended June 2024, putting the water firm at risk of not being able to refund clients.
The water services regulator has also warned that the registration of companies under names similar to NCWSC has exposed its assets to fraud.
In a letter to NCWSC Managing Director Nahashon Muguna in late May, the Water Services Regulatory Board (Wasreb) said that an inspection it conducted from March 17 to 21 this year revealed the company had failed to safeguard customers’ deposits.
The inspection sought to monitor the water firm’s performance and assess its compliance regulatory tools.
“The company erroneously utilised all the customers’ deposits to carry out its activities without approval from Wasreb. It does not even maintain any bank account for securing customers deposits. As of 30th June 2024, the company had basically used all the collected customers’ deposits of Sh1,229,417,698/- without approval from Wasreb,” the regulator’s acting CEO Richard Cheruiyot stated.
NCWSC requires customers to make deposits of between Sh2,500 (domestic) and Sh100,000 (heavy industries) to be connected to water or sewerage services.
The Wasreb inspection also revealed that there are companies that have been registered under names similar to NCWSC, which it terms “too risky to the safety of its assets and resources since they may be used to defraud it or the general public.”
This is besides the water company having two out of its 5,000 issued and paid-up shares held in offices of Nairobi Governor and the County Secretary, which are not legal entities and cannot own any property by law.
“The WSP (water service provider) has not been able to access the portal for Business Registration Services (BRS) on e-Citizen due to technical issues. As a consequence, the company is unable to file annual returns online, update its details and profile online, as required of it under the law. Fraudsters may have infiltrated the company through BRS and carried out illegal activities in its pretext,” Wasreb warned.
The regulator also faulted NCWSC for operating without a valid strategic plan and a business plan, thus running without any strategic direction.
Wasreb observed that the water firm has many unserviceable assets, including vehicles and motorcycles that it needs to dispose of. “NCWSC does not have a valid water operating licence from Wasreb. The last valid interim licence number … expired on 21st December, 2022,” the regulator said.
This publication sought responses from the NCWSC’s leadership regarding issues raised by Wasreb on Thursday but there were no responses by time of going to press. We sent questions to the water company’s managing director, Nahashon Muguna, and the finance director, Paul Omondi.
“The MD will respond to the questions,” Mr Omondi said in a phone call on Friday.
However, Mr Muguna did not respond to messages or answer phone calls.
The regulator also pointed out that besides operating a high level of non-revenue water (NRW) –water supplied to users that eventually is not paid for— there were gaps in the NRW reporting, raising concerns of inaccuracies in the reported figure.
NCWSC reported a 47.9 percent NRW, against the required 25 percent.
Wasreb also noted that NCWSC lacks valid effluent discharge licences from the National Environment Management Authority (Nema) for wastewater treatment plants in Dandora (Ruai), Kariobangi, Kahawa West ponds and Karen ponds.
“The land on which all the waste water treatment plants (i.e. KSTW, DESTW, Karen Ponds and Kahawa West Ponds) are under threat of either being encroached on or being grabbed altogether. This is a big threat to sewerage services to the residents of Nairobi and neighbouring Counties,” Wasreb said.
The regulator also faulted the company for holding a high number of aged staff and those serving in acting capacity, including in critical positions.
