Malombe on the spot over Sh1b pumped into mystery water firm
A Senate committee has asked the Ethics and Anti-Corruption Commission (EACC) to commence investigations into the Sh173.9 million non-revenue water loss by the Kitui Water and Sanitation Company (Kitwasco).
Senate County Public Investments and Special Funds Committee on Tuesday also put the Kitui County Government on the spot for pumping close to Sh1 billion into the company since 2015 despite unclear ownership.
The water firm is reeling in debts of close to Sh500 million.
Kitui Governor Julius Malombe told the committee that the devolved unit has been spending between Sh8 million and Sh10 million respectively monthly to support the company.
Malombe said the financial support began in 2015, during his first term, and has continued ever since.
However, the committee questioned why the Kitui Executive was spending such amounts even though the county does not fully own the water company.
Auditor General Nancy Gathungu, in her audit report for the Financial Year ending June 2021, said the county government did not provide details of subscribers to the company and a statement of guarantee as required by the Companies Act, 2015.
In addition, no document was provided to show that the ownership of the company changed from Limited by guarantee to Limited by shares and transferred to the county government as required by the Water Act, of 2016.
“That is a lot of money with the kind of accounts we are seeing here coupled with ownership issues. Why is the county government spending so much money on a company that is not yours?” committee chair and Vihiga lawmaker Godfrey Osotsi asked.
He went on: “As it is now, we cannot confirm who owns the company until we get the documents because we are a committee of evidence.”
Osotsi noted that the county government had failed to provide documents showing they own the company with the devolved unable to submit an updated CR12.
Rare commodity
But while defending his administration, Malombe admitted that the amounts are huge but asked the committee to see value for the expenditure in that residents are supplied with the commodity.
He explained that the county owns the company through guarantee and not by shares as is required by Water Services Regulatory Board guidelines.
William Kisang (Elgeyo Marakwet) criticised the governor for only giving the committee futuristic responses without enumerating what has been done to correct the situation.
“So, it means there is nothing you did to solve the ownership issue of the company during your reign between 2013 and 2017?” posed Kisang.
“You did nothing during the transition period when you were the governor and even now, what are you still waiting for?”Prof Tom Ojienda (Kisumu) added.
However, Malombe defended himself saying his administration had several grey areas when he came into office in 2013 and the Water Act 2016 came into force at the tail end of his administration so he had no time to comply with the requirements of the new law.
“This is an audit query because the county government should not be supporting a company they don’t own. You need to fast-track the change of ownership,” Kitui Senator Enock Wambua noted.
Malombe said the county government will comply with the requirement by September 30.
Kitwasco is facing audit queries over Sh240.9 million in trade receivables having risen from 200.2 million in 2019 with Sh168.1 million having been outstanding for more than 120 days implying that their collectability is doubtful.
The statement of financial position of the company also reflects trade and other payables balance of Sh144.4 million where only Sh54.3 million can be supported leaving Sh90.1 million as unsupported.
The committee directed total restructuring of the board within 60 days, appointment of a substantive managing director, and introduction of performance contracts for all staff as well as ensuring full ownership is transferred within 30 days.