Treasury to back loans held by devolved water companies

Director of Water Resources John Nyaoro. FILE

By Sandra Chao

The Treasury will continue backing loans held by water service companies and regulators even after the utilities are devolved to the counties.

Director of Water Resources John Nyaoro said this would retain the goodwill of lenders and help 18 million Kenyans access the vital commodity.

“We have the responsibility to ensure that we give them capacity and help them secure resources to be able to increase the water supply to about 18 million Kenyans without access,” he told the monthly Water Dialogue in Nairobi on Tuesday.

As autonomous commercial public entities, the water companies and boards took financial commitments on government guarantees.

With devolution, however, they would be managed under respective counties, many of which do not have the wherewithal to assure development partners that they would underwrite the loans.

Mr Nyaoro said the government would extend the existing guarantees to counties once an audit of the loans and contracts is done and modalities of servicing the loans are made.

Role

“We are now negotiating with the counties to see how they can take up their devolved role and continue with water supply. At the same time we are assuring development partners that the  central  government  will  guarantee those loans in case of liability,” Mr Nyaoro said.

Under the Constitution, counties cannot borrow without being underwritten by the national government. The Constitution rests increasing access to water and provision of sanitation services with the counties.

Official data shows water coverage in rural areas is at 53 per cent, compared to 83 per cent in urban areas.

Nairobi for instance requires 600,000 cubic meters of water but only 500,000 is supplied through loans from the World Bank, Africa development Bank and other development finance institutions.

Mr Nyaoro said the services would be devolved gradually to enable counties especially those in urban areas to develop capacity for managing the assets and liabilities of the water service providers and boards.

The Water Services Regulatory Board (Wasreb) last month proposed that the 102 water service providers be merged into 15 units because 52 of them cannot survive as commercial entities.

Wasreb also found that the suppliers incurred losses of 10.6 billion to due to leakages, threatening their viability.