Nairobi City Water and Sewerage Company signage in Industrial Area. FILE PHOTO | NMG
Nairobi City Water and Sewerage Company (NCWSC) is looking for a long-term loan to settle Sh2.23 billion outstanding pension debt and avoid growing penalties.
The firm, a wholly-owned subsidiary of Nairobi County, says in tender documents it wants to enter into an arrangement with a financial institution—possibly a commercial bank—to get the loan and repay within 10 years.
The outstanding amount is made up of Sh981.19 million accrued interest, Sh937.91 million actuarial deficit and Sh317.53 million unremitted contributions, all owed to the Local Authority Pension Trust (Laptrust).
“NCWSC is seeking a financial institution partner to finance the settlement of the outstanding pension debt due to Laptrust,” said the water firm in the tender. “The company will invite financial institutions providing competitive offers for negotiations in order to agree on the final structure and terms of the loan.”
The pension debt—split between Sh1.06 billion accrued in the pre-devolution era and Sh1.15 billion that had accumulated between April 2013 and December 2021—has grown over the years due to unremitted contributions, accrued interest and actuarial deficit.
NCWSC says it currently has a daily standing instruction of Sh3.5 million per working day (Sh73.5 million per month) to cater for a Sh44 million monthly contribution while the balance caters for the debt, which attracts the annual interest of 1.25 percent on a compounded interest basis.
“We intend to acquire the long-term facility to settle the outstanding debt and stop the daily standing instruction. This will enable us to stop further growth of the debt and clear the facility within 10 years without incurring additional strain to the Company,” says the firm.
Banks have up to June 28 to make bids to provide the loan, according to the tender documents signed by NCWSC managing director Nahason Muguna.
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