State corporations defied the ravaging effects of Covid-19 to post accumulated profits of Sh37.3 billion in the financial year 2020-21.
This was in the wake of reforms by the National Treasury and pressure from the International Monetary Fund, which has been pushing for the merger of some of the state-owned entities.
In 2019-20, state corporations—both commercial and non-commercial—cumulatively posted a loss of Sh9.5 billion.
“The big increase was mainly attributed to NSSF that posted Sh35 billion surplus funds in the fiscal year 2020-21 from Sh14.7 billion in 2019-20 and Kenya Power that posted Sh943 million from a loss of Sh7.5 billion,” Treasury CS Ukur Yatani said in a new report on public investments.
“The profit by Kenya Power was mainly attributed to cost containment measures and sealing of revenue leakages.”
The report tabled in Parliament recently reveals that the loss margins of the said entities have drastically reduced as well.
Commercial state corporations posted net losses of Sh12.6 billion compared to the Sh38.1 billion posted in 2019-20.
“The net loss is largely attributed to the continued loss-making trend by Kenya Railways Corporation which posted a net loss of Sh24 billion,” the report reads.
Also in the loss-making streak is AFFA (Sh146 million), Agro-Chemical (Sh237 million), Muhoroni Sugar (Sh375 million), NCPB (Sh3.1 billion), Nzoia Sugar (Sh2.9 billion), Sony Sugar (Sh1.3 billion), East African Portland Cement (Sh2.1 billion), KBC (Sh305 million), Postal Corporation (Sh43 million), National Oil (Sh1.3 billion), Consolidated Bank (Sh274 million), Post Bank (Sh1.1 billion), and KNSL (Sh35 million).
Buoyed up by the results, Yatani pledged to make the state corporations vibrant for them to keep posting positive returns.
“I wish to undertake that the government and National Treasury is desirous to undertake reforms in management, operations and governance of state corporations to ensure they deliver on their mandate as well as make a reasonable return to the government.”
Kenya Railways Corporation, the report shows, has the highest stock of government loans to parastatals at Sh569 billion from the total stock of Sh1.2 trillion as of June 2021.
Kenya Airports Authority also recorded a loss of Sh7.08 billion during the period under review, with state corporations under the Labour ministry reporting the highest profit of Sh35.1 billion.
State-owned enterprises under the Energy and Treasury ministries reported a profit or surplus of Sh19.3 billion and Sh15.5 billion respectively.
According to the Treasury report, revenues earned by the entities also increased from Sh674.7 billion in the year 2019-21 to Sh677.9 billion in the period under review.
The corporations’ asset base also grew from Sh5.2 trillion in the financial year 2019-20 to Sh5.4 trillion in the year ending June 2021.
“The increase is mainly attributed to the growth in infrastructure development projects under roads, energy, ICT, and water sectors,” Yatani said.
Even so, the state still supports a significant number of state-run entities with those under the Education ministry having received the highest grants of Sh61.8 billion.
“This allocation, accounting for 28 per cent of the total, was mainly to public universities,” the report reads.
Entities under the National Treasury received grants of Sh48.9 billion— being 22 per cent.
State corporations under the Transport ministry received the highest development grants at Sh74.8 billion, while those under the Treasury received Sh29.7 billion.
Yatani further revealed that no state corporation made a call to Treasury for settlement of guaranteed debt which has since reduced to Sh157.2 billion, from Sh160 billion as of June 30, 2020.
Of these, Sh11.8 billion is in respect of guaranteed loans to Kenya Power, Sh80 billion for Kenya Airways, Sh37.9 billion to Kenya Ports Authority, and Sh26.6 billion in respect to KenGen.
The Treasury has further revealed the government is at the risk of paying Sh108 billion should some state entities default on their loan obligations.
Of this, Sh40 billion was attributed to Kenya Broadcasting Corporation over claims it breached a contract regarding the launch of a second channel and digital migration process.
-Edited by SKanyara