Auditor General Nancy Gathungu has unearthed massive rot at the Kenya Ports Authority (KPA) involving illegal acquisition of land at the Jomo Kenyatta International Airport (JKIA) and loss of revenue amounting to millions of shillings.

In a report for the financial year ending June 2024, Gathungu has revealed how a private company was occupying an area estimated to be 8,343 square feet (sq. ft.) at JKIA yet the actual size of the area occupied was bigger resulting in unbilled amounts.

The move comes after in 2019, the National Land Commission (NLC) revoked 108 illegally acquired title deeds of land around JKIA after KAA urged the commission to nullify the documents because any development made in those parcels of land poses flight risks.

Reads the report: “Sampled spot check and physical verification at Jomo Kenyatta international Airport revealed that a private company was occupying an area estimated to be 8,343 square feet (sq. ft.) but the actual physical ground area occupied by the company (club) was larger than the estimated size, resulting in unbilled amounts.”

Gathungu has also fingered the Authority’s Management for failing to provide satisfactory explanation why it offered rental facility at a very low rate of Sh6 per square feet against the Government land rates valuation for the other concessionaires which ranged from Sh20 per square feet to Sh122 per square feet per annum at the market rate.

The move, the report says, has seen the authority losing between Sh904,162 and Sh7,491,628 ad thus the Sh1.3 billion collected from the non-aeronautical revenue comprising rentals, concessions, security passes income and other non-aeronautical revenue was grossly understated.

Reads the report: “ln the circumstances, the rental income of Kshs 1,304,103,000 has been grossly understated.”

In addition, Gathungu raised concerns over the failure by the authority to collect income from the operators within the airships across the country despite the airstrips being active on domestic flights. The authority only collected Sh16.7 billion which she said could not be confirmed.

No explanation

She noted that a summary of the passengers, landing and parking of aircraft in the airstrips was not provided for audit and no explanation was given why the Authority did not collect aeronautical revenues from the airstrips

The aeronautical revenue comprises airport passenger service charge (APSC), landing and parking fees, airbridge charges and fuel uplift.

Reads the report: “ln the circumstances, the accuracy and completeness of aeronautical revenue of Kshs.16,680,1 11,000 could not be confirmed.”

Apart from the JKIA, Gathungu has also raised concerns that ownership of six parcels of land in various airports valued at Sh 1 billion have continued to be disputed.

The said properties include Land parcels in Nairobi County specifically Embakasi measuring 0.867 acres and valued at Sh4,335,000 part of which has been illegally excised and allocated to a third party despite the matter pending at the Court of Appeal for determination.

The others are two parcels of land at JKIA which have been occupied by a third party and the matter is pending at the Court of Appeal for determination.

Also, in dispute is an undetermined size of land at Wilson Airport occupied by a third party whose matter is pending at the High Court awaiting determination while in Malindi, Kilifi county Leasehold for a parcel of land measuring 0.8925 ha at the Malindi Airport was irregularly allocated to a church organization, and another lease for a parcel of land measuring 0.0549 ha allocated to a petroleum company.

High-value infrastructure

Both matters the port says are pending at the National Land Commission for advisories.

The report further raises concerns that 85 parcels of land at eight airstrips whose details and nature of the disputes have not been disclosed while regarding the Kenya Pipeline Company by the Government, the report raises concerns that while the property is registered in the name of the authority and was supposed to be transferred to the company, the management did not explain the reason for the failure to transfer the title yet the land holds critical, strategic and high-value infrastructure that serves the Country at JKIA.

Reads the report: “ln the circumstances, the accuracy and ownership of the property, plant and equipment balance of Sh1.03 trillion could not be confirmed.”

Gathungu has also faulted the authority over the Car Park Revenue Collection System by Kenya Airports Parking Services KAPS).
The collection of the car park income at JKIA was outsourced to KAPS which only pays the Authority a concession fee at the rate of 80 percent of parking revenue collections, subject to a Minimum Annual Guarantee (MAG) of Sh250 million.

But in the report Gathungu has raised concerns that the authority solely relies on the report from KAPS for billing purposes, yet no data verification and reconciliation is undertaken to ensure the accuracy of the information declared by the concessionaire.

Further the report raises concerns that a comparison of reports from EPOS and the KAPS system reports showed an unexplained variance of Sh71,094,144 for the 12 months period, adding that the KAPS and EPOS systems are not able produce a report with the details of the motor vehicles that entered the airport, time spent and the amount chargeable.

In addition, the report also raises concerns that the authority does not have sufficient and accurate data from EPOS to compute the correct monthly revenue in order to bill monthly as stipulated in the contract and as such the authority relied on sales data provided by KAPS, which is not verifiable.