Treasury: Why State took over KU hospital

This implies the government will use revenue from the referral hospital to offset part of the loan owed to China’s Exim Bank and ease the burden on taxpayers.

The revelation from the Treasury came weeks after Parliament directed the referral hospital be returned to Kenyatta University.

Documents tabled in Parliament exposed silent wars pitting the hospital board against the Kenyatta University (KU) management for control of the multibillion-shilling facility.

“The Kenyatta University Hospital constructed through an on-lent loan has since been taken over and is being managed by the national government to recover the loan amount after non-settlement of their arrears,” Mr Yatani says in the latest public debt disclosures.

The Treasury does not indicate whether it will hand over the hospital to the university upon full recovery of the debt.

Under the loan deal, Kenyatta University was offered the 20-year debt that had a grace period of seven years, and the first semi—annual repayment was due on September 21, 2018 with completion set for March 21, 2031.

President Uhuru Kenyatta —who had signed the loan on behalf of KU when he was Finance minister in June 2011— gazetted the hospital as a parastatal under the Ministry of Health (MoH) on January 25, 2019.

This effectively severed the relationship between it and the university.

The hospital as a parastatal under the MoH is not obligated to allow unlimited accessibility and availability to KU staff and students.

The university protested to Parliament that its staff and students have been denied access to do practicals at the facility.

The Treasury had in June 2011 borrowed the funds from the State-owned Chinese lender on behalf of Kenyatta University, loans which it classifies as on-lent debt.

Kenyatta University owed the Treasury nearly Sh10.86 billion in June 2020 with Moi University’s State debt at Sh231.25 million, according to the debt documents at the time.

In the period through June 2021, Mr Yatani says the total stock of on-lent State debt in the education sector amounted to Sh231.25 million — capturing only the debt held by Moi University.

The takeover of the KUTRRH has, however, faced resistance from, among others, a section of lawmakers and the Universities Academic Staff Union (Uasu).

The National Assembly Select Committee on Implementation last September recommended that President Kenyatta revoke the legal notice that placed KUTRRH under the Ministry of Health before March next year.

“H.E the President should revoke the legal notice number 4 of 2019 and revert the Kenyatta University Teaching, Research and Referral Hospital (KUTRRH) to a university hospital within six months of adoption of this report,” the committee wrote in its report which is awaiting House approval.

Earlier in the year, Uasu’s Kenyatta University Chapter secretary-general George Lukoye claimed in a petition to the National Assembly that KU students and staff had been denied access to the facility.

This, Dr Lukoye charged, was against the broad reasons for establishing the hospital, which was to use the facility for teaching, training and research exclusively by KU staff and students.

The Treasury has allocated Sh3.49 billion towards operational expenses, including salaries, to KUTRRH this fiscal year ending June 2022, more than double Sh1.65 billion the year before.

FLAWED TRANSFER

This is about a fifth of Sh15.20 billion allocated to the Kenyatta National Hospital and about 31 percent of Sh11.21 billion to Moi Teaching and Referral Hospital.

The KUTRRH’s budget, however, dwarfs Sh1.20 billion to Mathari National Teaching and Referral Hospital and Sh800 million to Othaya Teaching and Referral Hospital.

The lecturers’ union chapter at KU insists the transfer of KUTRRH from MoH was flawed and went against the University’s Strategic Plan 2016-2026.

Prof Olive Mugenda, who oversaw the construction of the larger part of the KUTRRH when she was KU’s vice chancellor, has since April 2019 been chairing the board of the hospital that also has a seat for the dean of the university’s School of Medicine.