Penalties on the State for delayed payments to suppliers and contractors have jumped 15.34 percent to Sh24.8 billion between June and December 2024, piling pressure on the government to clear its dues.
The latest report by Controller of Budget (CoB) Margaret Nyakang’o shows that the penalties for delayed payments rose from Sh21.5 billion in June 2024, meaning that the contractors and suppliers slapped the State with an additional Sh3.3 billion penalties in the six months to December.
State agencies that have been penalised include the Kenya Rural Roads Authority (Kerra, Sh12 billion), Kenya National Highways Authority (KeNHA, Sh7 billion), Kenya Medical Research Institute (Sh1.45 billion), Pyrethrum Processing Company of Kenya (Sh777 million) and Chemelil Sugar Company (Sh134.29 million).
The National Oil Corporation of Kenya has been penalised Sh966 million, Kenya Urban Roads Authority Sh448 million, Tanathi Water Works Development Agency Sh1.22 billion and the Nairobi Metropolitan Area Transport Authority Sh754.5 million.
By the end of December, the latest controller of the budget report shows, the national government had accumulated Sh524 billion in pending bills, an increase from Sh516 billion six months earlier.
“This comprised Sh426.25 billion (81 percent) for State corporations SAGAs /SOEs and Sh97.81 billion (19 percent) for MDAs,” said Ms Nyakang’o.
Agencies with the biggest pending bills included the KeNHA with bills totalling Sh89.9 billion, Kerra—Sh66.3 billion, Kenya Electricity Transmission Company with Sh22.7 billion and Kenya Power with Sh20.5 billion.
Debts owed to contractors for development projects being implemented constitute 46.4 percent (Sh243.19 billion) of the pending national government bills.
The bills were followed by debts owed to suppliers of consumables and general supplies (Sh44.7 billion), pension arrears (38.19 billion), and Sh20.8 billion for pay-as-you-earn deductions.
By the end of December, State agencies owed the National Social Security Fund Sh506 million, the National Health Insurance Fund (Sh114.6 million), Saccos (Sh2.8 billion) in the form of unremitted deductions and owed financial institutions Sh2.8 billion in unremitted loan deductions.
“The National Treasury should release funds to the MDAs per the cash flow projections and approved plans for seamless implementation to ensure projects are completed in a timely manner. This will curb the accumulation of pending bills and additional costs related to delays in project completion on both the demand and supply sides,” Dr Nyakang’o recommended.
The CoB said a majority of State agencies’ pending bills are historical, with a huge chunk owed to contractors and suppliers of products to the government.
State corporations owed contractors Sh243.25 billion by the end of December in relation to projects, which was 57 percent of all pending bills by state corporations.
