The Kenya Railway Corporation cannot account for Sh12 billion meant for land compensations under Standard Gauge Railway (SGR) Phase one, a report by the Public Investments Committee, Commercial Affairs and Energy states.

According to the report supporting documents for compensations amounting to Sh 12 billion to the Project Affected Persons (PAPS) including a list of beneficiaries were not provided.

Also not provided for audit review were copies of National Identity Cards, Personal Identification Number (PIN) certificates and title deed surrenders from the National Land Commission.

Further, the corporation made overpayments of land compensations amounting to Sh14 .7 million. This was made to beneficiaries who were paid Sh15.8 million instead of the entitlement Sh 1.1 million.

Although recovery of Sh 5.7 million has been subsequently made, a balance of Sh9.2 million was outstanding as of June 30, 2020. 

Unsupported payments

“In the circumstances, the accuracy and propriety of the unsupported payments and overpayments of Sh1. 1 billion and Sh8.9 million respectively on land compensation could not be confirmed,” reads the report.

The statement of profit or loss indicates that SGR freight revenue was Sh12.2 billion but this differs with the Kenya Ports Authority (KPA) revenue amount of Sh8.9 billion resulting to an unreconciled variance of Sh3.1 billion.

 Further, although the Corporation generates invoices to KPA using the Freight Management System (FMS), the debtor’s statement indicating the level of indebtedness was not provided for audit review.

“In the circumstances, the accuracy and completeness of the reported main income of Sh14.6 billion for the year ended June 30, 2020 could not be confirmed,” reads the report.

Current liabilities

According to the report, the company’s current liabilities exceeded its current assets by Sh9.3 billion as of June 30, 2020.

The company has remained in a negative working capital position for the second consecutive year (from FY 2018/19 and FY 2019/20). The MPs further note that the corporation continues to perform dismally with the statement of comprehensive income for the year ended 30 June 2020 reflecting an operating loss of Sh24.2 billion compared to a loss of Sh8.5 billion for the year ended June 30, 2019.

The above conditions are indicative of material uncertainty exists that may cast significant doubt on the corporation’s ability to continue as a going concern unless satisfactory measures are taken to reverse the trend. The continued survival of the Corporation is therefore, dependent on the creditors goodwill and government support.

 The company has a balance of Sh15.2 billion in respect of freehold land. As reported in the audit reports for previous financial years, various parcels of land were allocated to third parties without the consent of the corporation by either the Commissioner of Lands or the defunct local Authorities.

For instance, land within Limuru railway station constituting nine industrial plots measuring approximately three acres, a piece of land within Kikuyu railway station measuring approximately two acres and parcels of land adjacent to Mombasa railway station measuring approximately 0.75 to one acre have been irregularly allocated to third parties with some having been developed.

Another 529 parcels of land have been illegally allocated across the country. However, Management has sought court intervention to repossess 27 parcels of land.