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Nairobi City Water and Sewerage Company (NCWSC) is facing a bleak future after the Auditor General revealed that it is operating on a negative of Sh927 million.

And now senators have summoned firm’s directors over financial malpractices running into billions of shillings.

Auditor General Nancy Gathungu, in her latest audit report for the Financial Year ending June 30, 2020, indicated that the company recorded a net operating loss of Sh850.8 million up from a net operating surplus of Sh61.2 million the previous fiscal year.

Senate Public Investment and Special Funds Committee, chaired by Vihiga lawmaker Godfrey Osotsi, now wants the water utility firm to explain the serious financial distress they are operating under.

This even as the report revealed that NCWSC made an under-collection of Sh2.47 billion collecting Sh9.18 billion against a target of Sh11.65 billion.

“Similarly, the company incurred an expenditure of Sh10 billion against an approved budget of Sh9.87 billion resulting in an over-expenditure of Sh156.1 million,” the report.

Report also shows the loss has seen the company plunge deeper into the financial red line with a negative Sh5.9 billion revenue reserve with liabilities of Sh4.49 billion against assets balance of Sh3.56 billion. “This material uncertainty in relation to going concern and any mitigating measures put in place by the company’s directors to reverse the undesirable precarious financial position has not been disclosed,” Gathungu says in her report.

In addition, company is also on the spot for stalled mega projects amounting to Sh469.1 million.

Report shows some of the projects were scheduled to be completed in 2018 but are incomplete four years later despite the firm making payments of Sh192.8 million to the various contractors.

“Consequently, value for money has not been realised on the implementation of the projects,” Gathungu noted.

The company is on the spot for failing to remit Sh790 million pension funds  in staff pension deductions and employers’ contributions, with some dating back to as early as the Financial Year ended June 30, 2014.

During the period under review, the firm only billed 86.3 million cubic meters of water out of the 176 million cubic meters produced, representing 49 per cent, resulting in losses running into billions.

The non-revenue water saw the company collect a paltry Sh8.3 billion against a target of Sh10.4 billion.

Water  firm could also not explain why it continues to withhold payments of Sh576.9million to Water Services Regulatory Board and another Sh423.9 million to Water Resources Authority.

Biggest chunk

The report also shows  NCWSC is owed more than a Sh1.6 billion with the Kenya Revenue Authority owing the biggest chunk of Sh1.4 billion.

Report also shows  the water company made an over-expenditure on the firm’s Board remuneration amounting to Sh21.2 million.

According to the report, the utility provider spent Sh50.2 million as payments to its Board members against a budget of Sh29 million and another Sh24 million irregular bonus payments to staff with the management unable to provide the basis for the payment.

Further, report reveals that NCWSC contravened the allowable borrowing threshold by Sh216 million after going on a non-current and current borrowing spree of Sh681 million.

Public Finance Management Act stipulates that a company can borrow only five per cent of its last audited revenues, which ought to have been Sh464.9 million.

Gathungu also fingered the water utility firm in what she termed as maintaining unsupported customers’ credit balances of Sh217.5 million resulting from customers whose accounts were overpaid and hence issued with credit notes due to overbilling.

She faulted the management for failing to maintain an updated assets register, adding that the firm did not include parcels of land and dams of undetermined value in the register. “The register omits various unvalued parcels meant for expansion, storage, water and sewerage treatment works which have been encroached on by private developers. The company has liabilities of Sh6.7 billion due to Athi Water Services Board from lease fees, though they could not provide a lease agreement for audit review.”

Water company  has lso been fingered for being in breach of the law by having long-standing imprests, of more than a year, of Sh3 million issued to staff members to cater for procurement of goods and services with some officers holding multiple imprests.