Kenya Ports Authority Managing Director Captain William K. Ruto.
A number of companies dealing in cargo and tenants have been trading with the Kenya Ports Authority (KPA) despite owing it Sh15.6 billion for over seven years, after they disputed the debts and legally blocked the agency from collecting the dues.
KPA says the companies –engaged in cargo transportation and logistics for domestic and cross-border traders— disputed the debts and some sued it, getting orders compelling it to trade with them while they still owe the amounts.
Auditor-General Nancy Gathungu had previously raised concerns over KPA continuing to trade with the companies, terming its debt collection strategies as ineffective. But in a new report Gathungu says KPA continues to engage new strategies to recover the money but has so far been unsuccessful.
Auditor-General Nancy Gathungu.
“The increase in receivables is mainly due to disputed cases which are being negotiated with the customers for settlement," the auditor-general says in a report quoting KPA.
“The authority continues trading with these customers as a way of enforcing recovery as we have seen cases where customers have gone to court seeking injunction compelling KPA to allow them to continue operating and stopping collection of debt.”
The new report by Gathungu sought to monitor KPA’s compliance with the MPs’ directive that the state-owned corporation steps up its debt collection efforts. KPA, however, blames the courts for tying its hands from collecting the dues while, at the same time, ordering it to trade with the entities.
KPA now says it has resorted to threatening the cargo firms as a strategy to pressure them into paying, even as the auditor-general warns that recovery of the debts is doubtful.
“In view of this inefficiency in the legal system the prudent thing to do is to negotiate, persuade and threaten,” Gathungu quotes the KPA management.
Fuel tankers enter the Kenya Ports Authority yard at Gate 12 in Mombasa on July 30, 2024.
By June 2019, the trade cargo and trade marine firms owed KPA Sh15.66 billion out of the total Sh15.9 billion the agency was to be paid. The remaining Sh287.23 million was owed by the Ministry of Transport.
An earlier audit observed that between July 2018 and June 2019, the debts owed by those companies shot up by Sh1.4 billion (10 per cent).
The audit classified the debts as constituting those owed under trade cargo, trade marine and rental receivables, with trade cargo debts accounting for Sh4.3 billion.
“An audit review of the ageing analysis revealed that an amount of Sh964,271,233 has been outstanding for more than one year while the Authority continued to engage in business with the debtors,” the audit said.
Kenya Ports Authority (KPA) yard in Mombasa.
MPs in June 2024 directed KPA to pursue all debtors to ensure that they honour their dues.
The report monitoring KPA’s compliance with the directive to collect debts concluded that it remained unimplemented by the end of March this year when the report was officially signed. The report was, however, released this week.
“The management did not provide any evidence that they had pursued the debtors to honour their debts,” Ms Gathungu said.
