Prime estates that Sonko is thinking of giving away to clear debts

City Hall is considering swapping some of its prime assets to offset some of its debts as the county grapples with ballooning arrears.

According to the county’s official documents, negotiations have already commenced with the Local Authorities Pension Trust (Laptrust), one of the statutory creditors owed by the county government, to transfer one of its prime assets to settle the outstanding debts. It owes Laptrust over Sh10.9 billion.

The county’s debt as of December 2018 was Sh70.2 billion, having risen by a whopping Sh13.7 billion since Governor Mike Sonko came into office in August 2017.

‘ACCRUED DEBT’

“To settle this amount owed to Laptrust, the county in the past has negotiated with the statutory creditor to transfer to the scheme one of our prime asset/estate in respect to accrued debts,” reads the County’s Medium Term Debt Management Strategy for 2019/2020 financial year.

In 2013, the devolved unit transferred Mariakani Estate, valued at Sh1.45 billion at the time, to the Retirement Benefits Scheme Provident Fund in a deal to offset non-remittance of deductions from workers’ salaries that had accumulated to Sh2.1 billion.

The county owns several assets, such as the Jeevanjee Bachelors quarters, Old Ngara estate, New Ngara estate, Kariokor and Buruburu estate.

City Hall’s overall debt comprises statutory debt, money owed to suppliers of goods and services, legal creditors, personnel emoluments, loans and contingent liabilities.

Unpaid workers’ statutory deductions stand at Sh30.13 billion, unpaid suppliers and contractors and litigation (Sh10.63 billion), utilities (Sh0.64 billion; owed to Kenya Power), benefits owed to retired and deceased staff (Sh0.13 billion) and a KCB loan of Sh3.02 billion.

The latest developments are part of measures to be adopted by City Hall to manage its ever-growing debt portfolio..

DEBT SWAP

The county has also negotiated a debt swap with the National Social Security Fund to offset outstanding debt against property rates owed by the social services fund.

For Sh5 billion owed to the Kenya Revenue Authority, the county plans to approach the national government and negotiate a debt swap that will be guided by the outstanding rates owed to it by the national government.

Finance executive Allan Igambi explained that the devolved unit had introduced initiatives to manage its current debt levels aimed at cleaning up the balance sheet and improving its creditworthiness.

He observed that City Hall’s debt portfolio worsened over the years due to a growing wage bill and high compounded interest and penalties charged by the statutory creditors.