Treasury cites 14 parastatals in reforms quest

The National Treasury has cited 14 out of 18 key State parastatals as financially weak under its ongoing quest to reform the struggling agencies.

The 14 parastatals have been categorized into three, in accordance to their earnings rating.

For instance Kenya Power and Kenya Railways have been classified as unprofitable due to their high indebtedness from on-lent loans, large liabilities and acute liquidity challenges.

The Kenya Broadcasting Corporation (KBC), East African Portland Cement Company (EAPCC), the Postal Corporation of Kenya (PCK) and Kenya Post Office Savings Bank (KPOSB) have meanwhile been ranked as loss-making having lost their significant market share.

Eight other parastatals in the social service providers’ space have been found to operate below cost recovery but have strong social mandates to delivery core services.

The eight include the Kenya National Hospital (KNH), the Kenya National Examinations Council (KNEC), Athi Water Works Development Agency (AWWDA) and the Kenya Wildlife Service (KWS).

Others are the University of Nairobi, JKUAT, Moi University and Kenyatta University.

The 18 are part of an elaborate list of 260 State Corporations (SCs) and includes four profitable parastatals including the Kenya Ports Authority (KPA), Kenya Pipeline Company (KPC), Kenya Airports Authority (KAA) and KenGen.

A financial evaluation of the reveals a liquidity gap of Ksh.382 billion for all parastatals over the next five years even as exchequer funds face competing needs.

Treasury warns the liquidity gap mirror financial woes which may crystallize to significant fiscal risks to the economy if unaddressed.

The 18 cited parastatals meanwhile have a financial shortfall of Ksh.70 billion across the five-year period.

The exchequer has mulled restructuring the parastatal as a remedy measure alongside additional fiscal support for the deeply affected agencies.

Additionally Treasury lists more measures to restore the value of parastatals including revenue diversification, cost cutting, disposal of non-strategic assets and a review of capital investment plans.

Treasury says it will continue engaging individual parastatals to undertake reforms with the view minimizing or eliminating their dependence on exchequer support.

The evaluation of the State Corporations has been initiated by government and is being carried out with technical support from the International Monetary Fund (IMF) under a 38-months program.

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