Many water companies are barely surviving with latest reports showing they are technically insolvent and drowning in debt.
The reports by a Senate oversight committee show that the utility firms are bogged down by massive water wastage – mainly caused by leakages and theft – that is denying them revenue.
The reports by the Senate Public Investments and Special Funds reveal the firms are not properly keeping their financial records, with many risking losing their valuable assets due to lack of ownership documents.
Others are engaged in wrangles with private individuals over their ownership.
Committee chairman Godfrey Osotsi tabled the reports on the scrutiny of Auditor General’s reports on the firms in the Senate last week.
According to the reports, many water companies are losing more than 25 per cent of the water they generate to leakages and theft.
“The committee observed that majority of water companies had very high levels of non-revenue water, way above the recommended sector benchmark of 25 per cent as prescribed by the Water Services Regulatory Board,” the reports state.
It adds, “This was mostly attributed to dilapidated infrastructure (physical losses) and inaccurate meter reading and billing, and illegal connections (commercial losses).”
The report cites Gusii Water and Sanitation Company Limited and Bomet Water Company Limited which have levels of non-revenue water as high as 62 per cent and 53 per cent respectively in the financial year 2018-19.
“The company should put in place comprehensive measures to mitigate the non-revenue water,” the committee recommended to Amatsi water and sanitation company whose NRW stands at 33 per cent.
The panel recommends installation of smart meters to ensure accurate billing, replacement of the old water supply network as well as the introduction of a geographic information system (GIS).
In addition, the reports show that a number of water companies are operating on negative working capital.
“Therefore, the companies were unable to meet their short-term financial obligations as they fell due and relied on financial support from the county executive or development partners raising concerns on their sustainability,” the report states.
The committee revealed in the reports that most of the water companies had disputes with regard to the ownership of the assets.
Further, some water companies are jointly owned by two county governments leading to conflicts of ownership and management.
For instance, Kisii and Nyamira counties, and Bungoma and Trans Nzoia counties co-own water companies.
“The committee observed that most water companies had not fully transferred all assets and liabilities from the defunct councils and Regional Water Works Development Agencies as is required by the Water Act, 2016. In this regard, such water companies did not reflect their correct financial position within their books of account,” the report says.
The committee also observed that various water companies had continuously failed to remit statutory deductions to various institutions.
This is contrary to the Retirement Benefits Act, 1997, the Pension Act and the Income Tax Act, 1974 which requires the agencies to remit deductions to KRA, NSSF and NHIF.
“Within three months of adoption of this report, the management to provide a detailed status report on the settlement of the outstanding statutory deductions to the Senate and a copy to the Office of the Auditor General for subsequent reporting,” the committee stated.
The recommendation was in reference to Bomet water company that is yet to remit Sh12.91 million to the institutions.