Delayed payments cost government Sh24.8 billion in penalties in six months
Nyakang’o called on the National Treasury to align fund disbursements with approved cash flow projections to curb the rising pending bills.
A new financial strain is mounting on the government as penalties for late payments to suppliers and contractors hit Sh24.8 billion by December 2024, up from Sh21.5 billion.
Controller of Budget (CoB) Margaret Nyakang’o has flagged key agencies, including road authorities and research institutions for accumulating billions in unpaid dues, further straining the country’s fiscal position.
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The latest CoB report indicates that penalties for delayed payments surged by Sh3.3 billion within six months.
Among the State agencies penalised, the Kenya Rural Roads Authority (Kerra) leads with fines amounting to Sh12 billion, followed by the Kenya National Highways Authority (KeNHA) at Sh7 billion.
Other affected agencies include the Kenya Medical Research Institute (Sh1.45 billion), Pyrethrum Processing Company of Kenya (Sh777 million) and Chemelil Sugar Company (Sh134.29 million).
The National Oil Corporation of Kenya has been penalised Sh966 million, Kenya Urban Roads Authority Sh448 million, Tanathi Water Works Development Agency Sh1.22 billion and the Nairobi Metropolitan Area Transport Authority Sh754.5 million.
By the end of December, the national government’s pending bills had risen to Sh524 billion, an increase from Sh516 billion recorded six months earlier.
“This comprised Sh426.25 billion (81 per cent) for state corporations SAGAs/SOEs and Sh97.81 billion (19 per cent) for MDAs,” Nyakang’o said.
Highest pending bills
The agencies with the highest pending bills include KeNHA, which owes Sh89.9 billion, Kerra (Sh66.3 billion), Kenya Electricity Transmission Company (Sh22.7 billion) and Kenya Power (Sh20.5 billion).
Debts owed to contractors for development projects being implemented constitute 46.4 per cent (Sh243.19 billion) of the total national government pending bills.
Other outstanding obligations include Sh44.7 billion owed to suppliers of consumables and general supplies, Sh38.19 billion in pension arrears, and Sh20.8 billion in unremitted pay-as-you-earn deductions.
By December, state agencies had also failed to remit deductions owed to various entities, including Sh506 million to the National Police Security Fund, Sh114.6 million to the National Health Insurance Fund, Sh2.8 billion to Saccos, and Sh2.8 billion in loan deductions owed to financial institutions.
Nyakang’o called on the National Treasury to align fund disbursements with approved cash flow projections to curb the rising pending bills.
“The National Treasury should release funds to the MDAs per the cash flow projections and approved plans for seamless implementation. This will curb the accumulation of pending bills and additional costs related to delays in project completion on both the demand and supply sides,” she said.
The CoB further noted that a majority of the pending bills are historical, with a significant portion owed to contractors and suppliers. By the end of December, state corporations owed contractors Sh243.25 billion, accounting for 57 per cent of all pending bills by these entities.
The growing backlog of payments continues to raise concerns over the government's financial management, with analysts warning that failure to clear outstanding dues could impact service delivery and economic growth.
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