PAC clears Kimwarer, Arror queries despite unresolved concerns

THE Public Accounts Committee has cleared audit queries on the stalled Itare, Arror and Kimwarer dams, despite concerns Kenyans could lose more than Sh30 billion in the botched projects.

Auditor General Nancy Gathungu had flagged the loans, noting her office could not verify repayment terms or confirm if the loans were lawfully terminated.

This was after the government defaulted on Sh11 billion, risking legal penalties.

Gathungu also questioned whether the correct steps were taken to restructure the debt before repayment to the Italian lenders resumed.

However, in its report, the National Assembly’s PAC accepted Treasury PS Chris Kiptoo’s explanation that the loans were properly restructured.

“The committee has noted the submission by the accounting officer and found the matter was resolved,” the report reads.

MPs in plenary would, however, have the final say on the query when the report is subjected to debate for final approval.

In his submission, the PS had told the committee the resumption of payments previously halted in 2020 followed a Cabinet approval in April 2024.

Under the new agreements signed in June 2024, Kenya will now pay more than Sh30 billion (Sh31,475,529,447) for dams that remain incomplete.

Nakuru county’s Itare dam was abandoned after just 25 per cent progress and no work has been done on Arror and Kimwarer sites.

Former Public Service CS Justin Muturi recently quipped he refused to endorse the dam deals.

“The country has lost more than Sh38 billion. I couldn’t append my signature as attorney general. I have a paper trail on these, in soft copy,” Muturi claimed.

“I wondered why because the country was losing money on the project. They wanted me to sign and I declined."

Despite PAC’s clearance, Gathungu maintains that the Treasury failed to provide restructuring documents.

In the latest review of the loans question, the auditor general has cast doubt on the legitimacy of the Sh31.4 billion debt and value for money on the same.

Originally, the projects were to be funded through Italian government-backed financing, but the deals shifted to costlier commercial loans.

Meanwhile, legal cases against individuals linked to the scandal have collapsed, with all accused persons acquitted as of December 2023.

Treasury PS Kiptoo told PAC that the government and the lender, Intesa San Paolo, negotiated and agreed on a financial settlement.

The negotiated financing agreements for Itare, Arror and Kimwarer dams saw Kenyans pay more than Sh30 billion.

Ruto held meetings with the Italian Prime Minister Giorgia Meloni where the outstanding loans featured prominently.

The President said in January 2024 the projects would resume.

In the latest audit query, Gathungu says her office could not confirm the legitimacy of the restructured loans.

She cited frustrations with getting copies of the agreements to ascertain if there would be value for money for the citizenry.

The report for the year to June 30, 2024, the auditor general stated she was not furnished with the documents.

“In the circumstances, the authenticity of the outstanding balance after restructuring and value for money for the projects of Sh31,475,529,447 could not be confirmed,” the report reads.

Before the restructuring, Kenyans were to pay Sh62 billion for the aborted dams following the termination of the contract.

Treasury asserts that the letter had issued letters communicating that it had terminated the credit as initially stated.

PS Kiptoo said the transaction files containing credit agreements for the dams were taken by the DCI and have remained in their custody since the probe began.